What does "coverage territory" refer to in an auto policy?

The term "coverage territory" in an auto policy specifically refers to the geographical area where the insurance coverage is applicable. This is crucial because it outlines the locations where the policyholder is protected under the terms of the policy, such as the states or countries included in that coverage. Understanding coverage territory is essential for policyholders to know where they are insured while driving their vehicle.

In contrast, the other choices pertain to different aspects of an auto insurance policy. The state where the policy was purchased does not encompass the entire range of geographical coverage; it may only indicate the licensing jurisdiction. The range of vehicles covered under the policy is a separate consideration, focusing on which cars or types of vehicles fall under the coverage. Lastly, the limits of liability coverage refer to the maximum amount the insurer will pay for covered accidents, which is distinct from the geographical area. Knowing the definition of "coverage territory" helps clarify the scope and limitations of the policyholder's insurance protections while driving.