Demystifying 10/20/10 Car Insurance Coverage Limits

If you’ve shopped for car insurance lately you may have come across policies listed with three numbers like 10/20/10 or 100/300/100. These shorthand combinations refer to the liability coverage limits included but what do they actually mean?

In this article, I’ll explain exactly what 10/20/10 car insurance entails, when it could be a good fit for your needs, and how to determine if you require higher policy limits. Let’s demystify these common auto insurance terminology together!

What is 10/20/10 Car Insurance?

The 10/20/10 shorthand refers to the split liability limits for injuries and property damage built into a basic car insurance policy Specifically

• 10 represents $10000 per person for bodily injury coverage.

• 20 is $20,000 per accident total for bodily injury coverage.

• 10 equals $10,000 for property damage per accident.

So a 10/20/10 liability policy means you have $10,000 of coverage for injuries to any one person involved, up to $20,000 total for everyone injured, and $10,000 to pay for damages to other’s property like vehicles or buildings.

This is the lowest level of liability car insurance legally required in most states. Some states like Florida and Maine only require 10/20/5 limits, while states like Alaska require 50/100/25 minimums. But 10/20/10 is the most common baseline.

When Might 10/20/10 Limits Be Appropriate?

10/20/10 car insurance policies offer an affordable way to meet your state’s minimum required liability coverage, especially for drivers who:

• Have an older vehicle not worth much money
• Drive very infrequently
• Have ample personal assets to cover damages above the policy limits
• Currently face financial constraints but still need to legally drive

Purchasing just the minimum 10/20/10 liability along with comprehensive/collision coverage is a good way to balance cost and risk. This ensures the other driver’s injuries and property damage is covered up to $10,000 and $20,000 respectively in an at-fault accident, but your own car has coverage for theft, vandalism, weather damage, etc.

Scenarios Where 10/20/10 May Be Insufficient

While 10/20/10 compliance is suitable for some, it’s important to consider scenarios where injuries or property damage could easily exceed these low coverage limits after an at-fault accident:

• A collision where multiple parties suffer serious injuries, with medical bills stacking up above the $20,000 cap.

• Totaling an expensive luxury or commercial vehicle and causing damages surpassing the $10,000 property damage limit.

• Causing an accident where extensive repairs to infrastructure like a guard rail or utility pole are needed, costing more than $10,000 total.

• Being successfully sued by an injured party for damages that your 10/20/10 liability can’t fully cover.

• Getting into a hit-and-run accident with an uninsured driver, leaving you financially responsible for all damages.

In these situations, the victims affected could come after your personal assets and income if your insurance falls short. That demonstrates why it’s critical to consider more than just the minimum state-required protection.

How Much Liability Coverage is Recommended?

While 10/20/10 compliance meets the legal minimum, insurance experts typically recommend the following for better financial protection:

• Bodily Injury: $100,000 per person and $300,000 per accident
• Property Damage: $100,000 per accident

So a 100/300/100 split liability limit is preferable for most drivers, providing ample coverage for the majority of accidents. Some even recommend 250/500/250 or higher limits for an extra buffer of protection.

Determining the right level comes down to your personal risk tolerance, assets you need to protect, and the value of cars/property you could damage. An experienced insurance agent can assess your unique scenario and recommend limits to properly safeguard your finances.

Other Factors Impacting Minimum Limits

Beyond just your own personal situation, here are a few other factors that may increase your desired minimum liability car insurance limits beyond 10/20/10:

• Your State – States like Florida and Maine allow 10/20/5 minimums, while Alaska requires 50/100/25, so base limits on location.

• Your Car Value – Higher value vehicles warrant higher liability limits in case you total someone else’s car.

• Your Net Worth – The more assets you have, the higher limits you need to protect them from judgments and lawsuits.

• Teen Drivers – Teen or student drivers may necessitate higher 100/300/100 limits or more.

Again, an experienced local agent can incorporate these elements into a policy recommendation tailored specifically for you. Don’t settle on legal minimum 10/20/10 limits without considering the full picture.

The Takeaway on 10/20/10 Car Insurance

At the end of the day, 10/20/10 car insurance delivers state-minimum liability coverage at an affordable rate. For some drivers, this stripped down protection is suitable. But for most, conversing with an agent to identify policy limits that better fit your situation is imperative.

Don’t let legal minimums give you a false sense of complete coverage. Be sure to take the time to reassess your current policy liability split limits. An incremental premium increase could provide much more robust protection for you and your family’s assets. Investing in sufficient insurance today brings peace of mind down the road.