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Reports furnished by IRC or Insurance Research Council reveal that more and more people are reducing their auto insurance coverage to save cash. But this isn�t desirable. The IRC also anticipates that the rate of the uninsured will escalate to 16.3% in 2010 from 13.8% recorded in 2007.

Auto insurance limits are highly case specific and as of 2007 the auto insurance cost was approximately USD$847(Insurance Information Institute).

Opting for the right auto insurance limit is an important decision you are required to take prior to buying an auto insurance policy. This is because the coverage you opt for will decide whether it is adequate and if you will be able to afford the payments for your premium. It also requires that you understand the factors that determine your auto insurance cost as well as the coverage extended by your auto insurance policy.

There are many states that require you to buy auto insurance for covering your medical expenses too. Your auto insurance limit is the dollar amount that you are entitled to get in case you make a claim for a loss that is covered. The loss you have incurred should fall within the purview of the boundaries your auto insurance policy has set.

If you have a higher auto insurance limit you also pay a higher premium. There are many consumers that reduce their coverage to shed costs. But it is best not to compromise with your coverage. Many states make it mandatory for you to have a minimum coverage limit.

How is your auto insurance limit determined?

• First of all find out the minimum liability limits that are mandatory in your state.

• Insurance protects your assets when a lawsuit is filed against you so determine your assets.

• If the age of the driver is less than 25 years and above 65 years, auto insurance limit will be high.

• Keep in mind that you may be responsible for damaging more than one car if you are involved in a chain of accidents.

• Driving record and history of accidents

• The type of vehicle you own

• The age of the vehicle

• Place where you dwell

• The amount you are paying as deductible etc.

There are few factors that can be worked upon to keep your auto insurance limits within your reach. Understand your requirements thoroughly before you buy an auto insurance coverage.