When shopping for insurance policies, you may find yourself wondering what exactly a policy limit is and how in applies to you.
Understanding policy limits are vital to understand your insurance policy.
Coverage limits are the set, maximum amount of many that your insurance policy pays for a covered claim.
How Many Limits in One Policy?
There can be multiple coverages with any given insurance policy. Therefore, there are multiple limits within any given insurance policy.
How Coverage Limits are Determined
Coverage limits are appointed depending on the type of coverage they offer. Some are mandated by the state they’re in, some are based on preexisting value, and others others you have more of a say in setting the coverage amount.
Home Insurance Coverage Limits
Home insurance coverage limits are different than other coverage limits in that you get to choose your own limits. Specifically, you choose your dwelling or personal property limits. When deciding your home insurance coverage, make sure to consider things like cost of rebuilds repair, or replacement for your home.
Keep mind, your coverage limit determines how high your premium will be. Typically, the higher the limit, the higher the premium
In some cases, the limits set on one part of your insurance policy directly effect limits in other parts of your policy. For example, with a homeowners policy the limit set for your home itself directly effects the predetermined limit for the ‘other structures’ section of your policy.
Coverage Limits for Car Insurance
Limits for auto liability coverage are mandated by law on a state-to-state basis. Note that the state only sets minimums that each driver Mach comply with. Additional coverage can be purchased to increase said limit, and may even be encouraged depending on your circumstances.
For Washington State, liability coverage minimum limits follow the 25/50/10 rule. This translates to:
$25,000 bodily injury per person
$50,000 bodily injury per accident
$10,000 property damage per accident
Comprehensive and Collision Coverage Limits
These limits are equivalent to the actual cash value when you get in an accident.
As an awarded local insurance agency, Pfarr Insurance Agency prides itself on offering affordable, comprehensive insurance policies and coverage options for our clients. For more information about coverage limits and other insurance policy related questions, contact your local agent at Pfarr today. We’re located on beautiful Ruston Way in Tacoma, Washington, and ready to serve you.