What happens to liability limits when a policy is issued in another state?

When a policy is issued in another state, the liability limits are automatically adjusted to comply with that state's insurance requirements. Each state has its own minimum liability coverage requirements, which can differ significantly. Therefore, when a policyholder relocates or the insurance company issues a policy in a different state, the policy must align with the new state's standards to ensure compliance with local laws.

This necessity for adjustment not only protects the insured by providing the appropriate level of coverage mandated by the new jurisdiction but also safeguards the insurance company by ensuring that they are adhering to the legal obligations set forth in that state. In contrast, keeping the original limits might leave the policyholder underinsured or out of compliance, which is why the automatic adjustment to match the state's requirements is crucial.