How High Should My Auto Insurance Limits Be?

Auto insurance limits are the maximum amounts that your insurance company is required to payout. There are minimum auto insurance limits by state that each driver is required to carry, but you can always carry more coverage. The key to choosing your auto insurance limits is to consider your budget and carry high enough limits that you won't have complications in the event of a high-cost crash.

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Oct 30, 2020

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If you’ve had to purchase auto insurance in the past, you know that there are a number of decisions that need to be made to ensure you’re getting the best possible deal. Whether it’s choosing your deductible, add-on insurance packages, different premiums and figuring out where to apply discounts, ensuring you get the best deal on your car insurance can be a challenge. One of the most important decisions one makes when finalizing their insurance package is determining how high their auto insurance limits should be. In this article we will take a look at auto insurance limits, and try to explain an approach to knowing how to set the limits on your auto insurance policy.

What do you mean by ‘Auto Insurance Limits’?

insurance limit
How much will your insurance company pay in the event of an accident?

Auto insurance limits are essentially the top amounts that your insurance company is required to pay out in the event of an injury, crash or property damage that has been caused by your vehicle. For instance, if you have a $50,000 personal injury protection insurance policy, your limit is $50,000 in health care treatment and associated costs. Anything above and beyond your auto insurance limits will need to be paid for through another insurance policy, or perhaps your own pocket.

This is why choosing your auto insurance limits is important; if you set your limits low you might be able to save a bit of money, but you could be in trouble if you get in an expensive accident. If your limits are too high, you are wasting cash that could be put to better use somewhere else in your budget.

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Predicting the Cost of an Accident is Impossible

The reason you purchase auto insurance is to protect you financially in the event of a crash or accident. Since these events are impossible to predict, the costs involved with one are similarly very tough to try to determine. Your only accident in the next five years may be a small scrape or dent in your fender, or you may end up involved in a high-speed accident that causes significant bodily harm to drivers and passengers and high amounts of property damage.

If you decide to skimp on your auto insurance limits and end up with a costly accident (or worse, a lawsuit) on your hands, you could be in financial trouble. Medical bills are only getting more expensive as time goes on, and you never know if the other party is going to be driving a clunker or a brand new luxury car. The purpose of your auto insurance is to mitigate the financial risks involved with driving, so choose your policies wisely.

The Higher the Limits, the Better Off you Are

Without question, the higher your auto insurance limits are the better off you will be if you end up in one of these costly crashes. Ideally, you’ll want to ensure that your auto insurance provider ends up paying as much of the total cost as is possible. This includes vehicle repairs, injuries, lost wages and everything else that comes along with an accident.

If you can afford it, pay for your auto insurance limits to be as high as your insurer will let you go. Some states have laws regarding minimum auto insurance limits, and doubling or even tripling these is a good idea.

Low Limits can mean Wage Garnishing or Heavy Fines

The consequences of going with low auto insurance limits can end up being quite severe if you cause a high-cost accident. If you are unable to pay for the damages and other expenses above and beyond you auto insurance limits, a court deciding the case may order that your future employment wages be garnished until your total debt is paid off. This debt will most likely collect interest for as long as it takes you to pay it in full, which means that you can end up paying far more than the additional costs of auto insurance would have been in the first place. It’s tempting to skimp on your auto insurance, but be prepared for consequences if you end up in a costly accident.

low insurance limits
Low insurance limits means more money out of your pocket!

Higher Limits can mean Future Discounts

Going with higher auto insurance limits in the beginning can mean receiving discounts if you ever need to switch insurance providers later. Other auto insurance companies will typically offer you a bit off of their regular rates as you’ve already taken the initiative and paid to have your limits set higher.

The Key is Always your Budget

In the end, the real key to determining how high you set your limits is how much room you have in your budget to pay for auto insurance. If you need to scrape by with the bare minimum, you will probably have to set your limits at a lower amount than if you have extra cash you can contribute. Remember that it’s best to set your limits as high as you can reasonably afford to ensure that if you get in a costly accident, your insurance company foots as much of the bill as possible. is your partner in finding the best deals for auto insurance available from the many different insurance companies and providers. Our team scours through thousands of plans and rates to separate the best from the worst. To get started on reducing your car insurance costs, head up to the top of this page and enter your ZIP code in the form. We’ll take care of the rest. Thanks again for visiting!

Additional Resources

  • Allstate – Auto Insurance Limits And Deductibles
  • National General – How Much Auto Insurance Coverage Do I Need?

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