Which of the following best describes territorial limits in an auto policy?

Territorial limits in an auto policy refer specifically to the geographic areas where coverage applies. This means that if an insured vehicle is driven outside of these designated areas, the policy may not provide coverage for accidents or damages that occur in those regions. Auto insurance policies are typically structured to cover specific locations where the vehicle is primarily used, which includes the insured's residence, but can also encompass surrounding areas as defined in the policy.

The other options present alternatives that do not accurately reflect how territorial limits are defined. For instance, while filing claims may happen at various locations, this does not pertain to the geographical limits of coverage. Additionally, the notion of regions where cars can be insured without restrictions does not align with the idea of territorial limits, as these limits often come with specific exclusions and considerations. Lastly, areas excluded from all forms of insurance introduce a concept that is broader than territorial limits, as they may refer to general exclusions rather than specific limitations within an auto policy.