Insurance Coverage Limit in 2025 (Important Details Explained)

Drivers must carry their state’s minimum insurance coverage limits — also known as policy coverage limits — to remain legally compliant. Policy limits set the maximum amount an insurer will pay for bodily injury per person, bodily injury per accident, and property damage per accident.

Maintaining coverage that meets or exceeds these limits helps avoid legal penalties such as fines, license suspension, or vehicle impoundment. However, many drivers should know when to buy more than the minimum auto insurance to avoid paying out of pocket after a serious accident.

Insurance companies must offer policies that at least meet state minimums. Meeting the minimum is required, but many drivers opt for higher limits.

Keep reading to learn how to verify that your coverage matches current requirements. Enter your ZIP code to get more information and compare insurance options available in your area.

Understanding Insurance Coverage Limits

When you buy auto liability insurance, your policy includes specific limits that define how much your insurer will pay if you cause an accident.

Insurers usually express these limits in shorthand form, such as 25/50/25. Each number represents a different type of coverage for personal injury and property damage.

Insurance Coverage Limit Breakdown and Examples

A 25/50/25 policy provides $25,000 for bodily injury per person, $50,000 for bodily injury per accident, and $25,000 for property damage. When you understand these limits, you can better judge whether the minimum auto insurance requirements by state offer enough protection or if you need to increase it to fully safeguard your finances.

How Auto Insurance Coverage Limits Apply in Claims

When an accident occurs, your insurance company pays out claims based on the car insurance coverage limit listed in your policy. If the total damages exceed your policy limits, you may be personally responsible for the remaining costs.

Read More: 10 Best Property Damage Liability (PDL) Auto Insurance Companies

If multiple people are injured or multiple vehicles are damaged, your insurer will divide the available coverage according to these limits. Any amount beyond the limits will not be paid by the insurer, and injured parties may take legal action and pursue the remaining costs directly from you.

Coverage Limit Example in Claims

Your provider uses your per-policy limit to cap the insurance coverage maximum each injured individual can receive. Then it applies the per-accident limit to cap the total payout for all injuries related to a single incident. Lastly, it pays for property damage up to the policy limits.

Let’s say you have the minimum liability coverage of 25/50/25 and you cause an accident involving two people in another car. One person suffers serious injuries that cost $35,000 in medical bills. The second person has $20,000 in medical expenses. The damage to their vehicle is $15,000.

In this case, your insurance fully covers the second person’s medical costs and the property damage, but it doesn’t fully cover the first person’s medical expenses. You would be personally liable for the uncovered $10,000.

Learn more: How to File an Auto Insurance Claim

Comparing Minimum vs. Recommended Coverage Limits

State law requires drivers to carry a minimum level of liability coverage, but meeting the legal minimum doesn’t always mean you’re fully protected. These limits are intended to provide basic financial protection for others if you’re at fault in an accident. However, they often fall short in real-world situations, especially when medical costs or vehicle damage are significant.

State Minimum Insurance Coverage Requirements

Experts typically recommend higher coverage limits to better safeguard your finances and future. The recommended auto insurance coverage levels of at least 100/300/100 are most common:

• $100,000 for bodily injury per person
• $300,000 for bodily injury per accident
• $100,000 for property damage

Choosing coverage that goes beyond the legal minimum can give you peace of mind and stronger financial protection. Higher limits help ensure that your auto policy limits cover serious injuries or expensive damages.

How to Choose the Right Insurance Coverage Limits

When choosing the right auto insurance coverage limit, consider your financial situation, the value of your vehicle, and the level of risk you’re comfortable taking on. While minimum coverage may save you money upfront, it leaves you financially vulnerable in the event of a serious accident. Here are the main risks:

Insurance Coverage Limit Risks by Coverage Level

What is needed for adequate auto insurance coverage? Choosing the right auto insurance coverage goes beyond checking a box for legal compliance — it’s about making sure you’re truly protected when it counts.

Start by evaluating your finances. Think about how much you could realistically pay out of pocket if an accident exceeds your policy limits. Next, consider your vehicle’s value. If you drive a newer or high-value car, minimum insurance coverage limits will not be enough.

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For older, low-value cars, you might opt for reduced physical damage coverage, but it’s important to find a policy that matches your lifestyle, budget, and peace of mind. Don’t settle for the minimum — make sure your coverage keeps up with your real-world risks.

Enter your ZIP code to compare coverage options and find a policy that fits your lifestyle. It only takes a few seconds to see what’s available in your area.