The numbers 10/20/10 on your auto insurance policy are giving you the monetary limits on your Liability coverages.

The first number 10 stands for $10,000 which would be your maximum coverage for Bodily Injury Liability for one person injured in one accident or incident. The second number, 25, stands for $25,000 which would then be your maximum coverage for Bodily Injury Liability for all persons injured in one accident. The third number, 10, stands for $10,000 which is the maximum amount of coverage you have for Property damage others sustained in one accident that you caused.

Therefore, if you have 10/20/10 the minimum liability limits are $10,000 for Bodily Injury Liability (BI) per person for injuries you caused in an accident, $20,000 for all injuries in an accident (so your top limit for all injuries sustained), and $10,000 for all Property Damage Liability (PD) that you caused to others in an accident.

If these are your state minimum Liability limits than they should be enough for you to register your vehicle, however they are on the low side if you happen to severely injure other people or hit multiple cars (or just one expensive vehicle) in an accident at which you are at fault for. With low limits it leaves you and your assets at risk since you can be held personally responsible for amounts exceeding your car insurance limits.

For example in you are at-fault in an accident where there are 4 people hurt, the most any one person can get for their medical bills is $10,000 while all 4 in total would have to split the $20,000 top limit. So if one person was severely hurt they could top out their per person limit of $10,000 and have more medical bills that you would be responsible for usually. With one party already receiving $10,000 the other 3 people's medical bills would be paid out of the remaining $10,000 left of your BI coverage. If the total of their medical expenses exceeded your limit as well then they also could come after you personally for this money.

If you hit numerous cars in your accident then you would also likely exceed your $10,000 Property Damage Liability limit. If you totaled out a couple of car say each worth $8000 each than the other parties would have at least $16,000 dollars worth of claims and once again exceeding your Liability limits (the PD limit of 10K) like the injuries did with your BI coverage.

While financial circumstances do not allow all to raise their Liability limits it is recommended that you buy as you can afford. The insurance industry's recommended coverage amount is 100/300 for Bodily Injury Liability coverage. This would give you coverage of $100,000 per person for a total of $300,000 per incident.

If you select limits that are too low, you could be putting yourself at risk financially. To make payments for injuries or property damages that exceed your limits you could be forced to liquidate property, savings, and other assets, or your future earnings could be attached. By purchasing Liability limits to account for both your current assets and future net worth, you can help protect yourself against this risk.

Determining if you need Bodily Injury Liability insurance coverage above your state's minimum limits, will depend upon your own personal situation. Figuring out car insurance can be confusing and we have a tool which will help you understand insurance types and limits better. Our Online insurance coverage calculator will inform you about the auto insurance coverage that is right for you. Answer a few short questions and we'll give you some car insurance guidance on limits, deductibles and what kind of coverage you need.

For more information on car insurance coverages check out our Learning center and articles such as How Much Car Insurance Should You Buy? and Types of Auto Insurance Coverage Explained.

Then follow this link to get a quote from an auto insurance specialist.