The coverage limit you choose decides how much coverage you will receive when faced with losses. Here’s what you should know about insurance coverage limits to help you make an informed decision.
What Are Insurance Coverage Limits?
Insurance coverage limits refer to the maximum amount of money your insurer will pay towards an insurance claim. It is also known as the limit of liability—once crossed, you’ll be responsible for paying the remaining cost, irrespective of your coverage policy.
Generally, the higher the insurance coverage limit, the higher is the premium associated. However, the limits may vary according to the types of coverage.
Insurance Limits on Auto Insurance Policies
As an auto insurance policy offers different coverage options, you need to consider the limits of each.
- Auto liability coverage limits are set by state laws. Each driver is required to purchase at least the minimum as per state limits, but you can increase the limits as a proactive measure to protect yourself in the long run.
- No-fault insurance helps pay for the driver’s and passengers’ medical bills if injured during an accident.
- Comprehensive and collision coverage limits represent the actual value of a vehicle at the time of the accident. As a result, if your car is totaled during an accident, your auto insurance policy will consider its depreciation value to determine the amount you receive.
Insurance Limits on Homeowners Insurance
While choosing the insurance coverage limits of your homeowners insurance, you need to consider the following:
- Dwelling coverage refers to the cost of rebuilding your home.
- Personal property coverage refers to the value of your belongings.
- Liability protection protects you against the lawsuits for bodily injuries or property damage you cause to other people.
- Additional living expenses refer to the extra cost of living away from your home if it is severely damaged due to an insured disaster.Consider these factors while choosing insurance coverage limits. Need assistance in selecting the right insurance plan? Contact the experts at Weeks & Associates Insurance Services in Thousand Oaks, California. We look forward to getting you covered.