Every auto policy has limits: the most the insurer will pay for a covered claim. On a quote or declarations page they usually appear as a short string of numbers, such as 25/50/25 or 100/300/100. Those numbers are easy to skim past, but they decide who pays when an accident costs more than expected. This guide explains how to read them and how to decide how much is enough.
How to read liability limits
Liability limits are usually written as three numbers, each in thousands of dollars. Using 50/100/50 as an example:
- First number: bodily injury liability per person. The most the policy pays for injuries to any one person in an accident you cause, here $50,000.
- Second number: bodily injury liability per accident. The most it pays for all injuries in that accident combined, here $100,000.
- Third number: property damage liability per accident. The most it pays for damage to other people's cars and property, here $50,000.
The per-person limit applies inside the per-accident limit. With 50/100/50, if one person's injuries cost $70,000, the policy pays $50,000 for that person even though the per-accident limit is higher. The remaining $20,000 could become your responsibility.
| Limits | Injuries, per person | Injuries, per accident | Property damage, per accident |
|---|---|---|---|
| 25/50/25 | $25,000 | $50,000 | $25,000 |
| 50/100/50 | $50,000 | $100,000 | $50,000 |
| 100/300/100 | $100,000 | $300,000 | $100,000 |
| 250/500/100 | $250,000 | $500,000 | $100,000 |
These are common examples, not recommendations. Insurers offer many other combinations.
Split limits vs. a combined single limit
The three-number format is called a split limit because it divides your liability coverage into separate buckets. Some insurers also offer a combined single limit (CSL): one amount per accident that can pay for bodily injury and property damage in any mix. A $300,000 CSL, for example, could pay $280,000 for injuries and $20,000 for property damage, or any other split, up to $300,000 in total.
A CSL is more flexible because no single bucket runs out first. It is not automatically better, though. If you are offered both, compare a CSL with split limits at a similar total and look at the price of each.
State minimums are a floor, not a target
Almost every state requires drivers to carry a minimum amount of liability insurance or to prove they can pay for damage they cause. Each state sets its own minimums, so the required numbers differ from one state to the next, and states change them from time to time. Some states also require uninsured motorist coverage, and no-fault states require personal injury protection (PIP).
A minimum is the least the law allows. It is not designed to cover a serious crash. Medical bills for a single injured person, or the cost of replacing a newer vehicle, can pass low limits quickly. Check your state department of insurance or motor vehicle agency for the current rules, then decide whether you need more.
Other coverages have levels too
- Uninsured and underinsured motorist (UM/UIM): usually written like liability limits. Many drivers match them to their liability limits, since they protect you from the same kinds of injury costs when the other driver cannot pay.
- PIP and medical payments: shown as an amount per person. In no-fault states, the available PIP options are shaped by state law.
- Collision and comprehensive: these do not have a limit you pick. They typically pay up to the car's actual cash value, minus your deductible, so the choice you make is the deductible. The Deductible Calculator can help.
How much liability coverage is enough?
Liability coverage protects your own finances as well as other people. If you cause an accident and the costs go past your limits, the injured people can seek the difference from you. Depending on your state, that can reach savings, investments, home equity and even future wages. A practical way to set limits is to start with what you have to protect:
- Add up your assets: savings, investments, home equity and other valuable property.
- Consider your income. In many states a court judgment can be collected from future earnings.
- Think about who drives your cars, how often and where. More drivers and more miles mean more exposure.
- Look at property damage on its own. Many newer vehicles cost more than a low property damage limit would pay, so a higher third number is often worth pricing.
Many drivers with a home or savings treat 100/300/100 as a starting point and go higher as their assets grow. Drivers with few assets may still choose more than the minimum, because an unpaid judgment can stay with a person for years. The right answer is personal, so price several levels. Raising limits may cost less than you expect, but only real quotes will show what it costs for you.
Tip: When you ask for quotes, request the same policy at two or three limit levels, such as your current limits, 100/300/100 and 250/500/100. Seeing the price of each step makes the decision much easier.
When an umbrella policy makes sense
A personal umbrella policy adds liability protection on top of your auto and home or renters policies. It typically starts paying after your underlying limits are used up, and it is usually sold in amounts of $1 million or more. Depending on the policy, it may also cover some liability claims your other policies do not.
Insurers usually require you to carry certain auto liability limits before they will sell an umbrella, and those requirements vary. If your assets are well above the highest auto limits you can buy, or your household includes a teen driver, a pool or rental property, ask a licensed agent whether an umbrella fits.
Your next step
Find your current limits on your declarations page and compare them with what you have to protect. The Coverage Calculator estimates liability limits from your own numbers, and the Coverage Needs Worksheet helps you decide which other coverages matter. When you shop, use Compare Quotes to make sure every offer has the same limits. For what each coverage pays for, see Insurance Types Explained.