25/50/25: What Do the Numbers on Your Car Insurance Policy Actually Mean?
Your car insurance policy usually lives in a safe place in your car and only comes out to make an appearance after a collision or other emergency. If you’ve taken the time to get acquainted with your auto insurance card, you’ll notice a set of three numbers separated by a dash or forward slash. They might look like this:
In short, these three numbers represent the limits of your auto insurance coverage. They indicate the maximum amount your car insurance company will pay out for bodily injury and property damage claims.
What is Liability Car Insurance?
Liability car insurance is a crucial part of every car insurance policy. Let’s say you are involved in a collision where you are at fault. Liability insurance kicks in to cover the other driver’s costs or other passengers in the vehicle.
Are You Required to Have Liability Coverage?
Almost every state has a minimum level of liability coverage that every driver must have before driving a vehicle. In some cases, you’ll need this coverage before you’re allowed to drive a new car off the lot.
What Do Liability Limits Cover?
These liability limits cover three sections of your liability insurance: (1) bodily injury liability per person, (2) bodily injury liability per accident, and (3) property damage liability coverage. So if you see 25/50/25 on your policy, for example, you’d have $25,000 worth of bodily injury coverage per person, $50,000 worth of bodily injury coverage per accident (in case more than one person is injured), and $25,000 of property damage coverage.
These coverage levels help protect your financial assets when you’re involved in an at-fault collision. Your insurance company will cover any medical costs or damages to the property due to the crash.
Bodily injury liability can protect you financially in the following ways:
- Medical costs: Bodily injury liability covers any medical expenses incurred after an accident you caused. It will cover any ambulance rides, hospital visits, follow-up visits, and even hospital equipment, like crutches.
- Lost wages: Bodily liability coverage often makes up for any lost wages sustained by the other party if they are injured and unable to work. The amount awarded depends on how much time they spend out of work and the area’s wages.
- Legal expenses: If the other party sues you, your legal fees can often be paid for under bodily injury coverage. Your insurer will generally provide you with legal help and pay for your expenses.
- Funeral costs: If your collision resulted in death, this coverage would pay for any charges or fees associated with the funeral and burial.
Property damage liability coverage can cover the following costs:
- Vehicle Damage: When you’re involved in a collision and you’re at fault, you are responsible for paying for the cost of the damage. This covers anything from a simple dent in the bumper to a completely totaled car. This insurance covers the cost of repairing or replacing the vehicle of the other party.
- Property Damage: At times, your accident won’t involve another vehicle. You may run into a fence or a storefront. Property damage liability coverage kicks in to help you pay for the damages.
Liability limits don’t cover damage to your car or pay for any of your medical expenses. You’ll need comprehensive and collision insurance or uninsured motorist insurance to receive this kind of coverage.
What Liability Limits Should You Get?
There is no concrete answer for what liability limits you should get. Based on your location, your state will have a minimum legal requirement that all drivers should get. If you are financially well off, you might want to think about securing higher liability coverage. In case of an accident, you won’t run the risk of losing your assets in potential lawsuits.
While you may think that lowering your liability limits will help you save money on car insurance, you might want to think twice. The liability limits are set in a three-tiered system. Let’s say that your current policy is set at 10/20/10. If you’re at fault in an accident with three people, your insurance company will pay up to $10,000 per injury per person. You’re covered for up to $20,000 for everyone’s expenses in the accident, but if the total medical expenses exceed $20,000, you could find yourself in financial hot water.
Since your insurance won’t pay for any medical expenses exceeding $20,000, one of the other people involved in the accident may decide to sue you directly to cover their medical costs if they don’t have uninsured motorist coverage on their current policy.
Most Common Liability Limits
State Minimum Limits
Liability limits differ from state to state. However, when looking at states as a whole, 25/50/25 is a common requirement. You’ll see this kind of requirement in states such as Alabama, Arkansas, Georgia, Indiana, Kansas, and Mississippi, just to name a few. In other states, like Pennsylvania and New Jersey, property damage limits may be as low as $5,000. In contrast, Texas and North Carolina have higher than average bodily injury coverage per accident, coming in at a cool $60,000.
No matter where you live, you’ll need to make sure you’re legally covered when getting on the road. Compare.com can help you find your state’s minimum limits and help you find affordable car insurance rates based on your location.
25/50/25 Liability Limits
The most common minimum liability limit across state lines is 25/50/25. When broken down, this would be $25,000 worth of bodily injury coverage per person, $50,000 worth of bodily injury coverage per accident and $25,000 worth of property damage coverage per accident.
50/100/50 Liability Limits
While this level of liability limits is much higher than any state requirement, many drivers choose higher limits to protect themselves. In this case, here is how 50/100/50 limits break down: $50,000 bodily injury coverage per person, $100,000 worth of bodily injury coverage per accident and $50,000 worth of property damage coverage per accident.
Although it seems high, you’re better off safe than sorry. However, if you live in Texas or North Carolina, this level of liability limits will ensure you meet the state’s requirements. You’ll also be protected if the expenses from an at-fault accident are a bit higher than expected.
100/300/100 Liability Limits
The 100/300/100 liability limit breaks down into the following numbers: $100,000 worth of bodily injury coverage per person, $300,000 worth of bodily injury coverage per accident, and $100,000 worth of property damage coverage per accident.
You might want to increase your liability limits to 100/300/100 if you fall into the following categories:
- You have a new driver on your policy: New drivers tend to make poor driving decisions due to their lack of experience.
- You own a home or many properties: If found at fault in an auto collision where the amount exceeds your liability limit, you’ll need to pay the remainder out of pocket. In short, wave goodbye to your vacation home.
- You frequently drive a carpool: If you participate in a carpool, your exposure to injuries in case of an accident increases significantly.
- You drive a larger vehicle, such as a truck or SUV: Driving a larger car is great until you’re involved in a collision. Larger vehicles have more power, which unfortunately equates to more vehicle or property damage in an accident.
How Much Personal Injury Liability Should You Have?
We purchase insurance to fill in our financial gaps. When considering how much personal injury liability you should have, you’ll need to take a good hard look at your finances. Whatever expenses your insurer won’t pay will fall to you. Even if you’re financially stable to handle paying a few thousand, it’s unlikely you’ll have hundreds of thousands of dollars lying around right after a collision.
Is 25/50 Insurance Enough?
25/50 is a popular state requirement, but it’s up to you to decide if you’re comfortable with this level of coverage. Your personal injury liability coverage limits come down to your ability to pay. If you feel that you need more coverage to protect yourself and your assets, purchasing a higher limit will put your worries at ease.
How Much Property Damage Liability Should You Have?
It depends on where you live. Almost every state requires drivers to hold a minimum amount of property damage liability. If you wish to keep your premium on the lower side, perhaps the state requirement is all you need. However, some drivers choose to purchase additional property damage liability to have peace of mind. And with the price of new vehicles increasing every year, having a bit more property damage coverage probably doesn’t hurt.
It might be worth it to purchase a policy with more than the minimum coverage if you:
- Live in a busy urban area with heavy traffic
- Have a history of being an accident-prone driver (hey, it happens to the best of us)
- You have several assets you wish to protect
As with most insurance policies, the higher coverage limits you choose, the more expensive your insurance premium will be. Regardless of how much property damage liability you choose to have, you can use Compare.com to find an affordable car insurance policy that still enables you to protect your assets.
What Happens if You Exceed Your Policy Limits?
Your property damage liability limit is the maximum amount of money your insurer is willing to pay out to cover the cost of damages. If the cost of the property damage exceeds this amount, the other party can choose to sue you to recover the remaining amount. You may need to sell your car, financial assets, or even your home to come up with the difference. The same goes for your bodily injury limits, as well.
To avoid this dicey situation, many drivers choose to purchase additional property damage liability insurance on top of their state’s minimum limit. They do this through an umbrella policy that kicks in after their regular policy. While the highest standard limits only allow for coverage up to 250/500/250, this policy has a maximum limit of $5,000,000.
What’s the Difference Between Bodily Injury and Property Damage Limits?
The most significant difference between bodily injury and property damage limits lies in what they cover in an accident. Bodily injury limits pertain to the amount of coverage extended towards people involved in an accident. When you’re at fault in an accident, bodily injury insurance will cover costs of medical expenses incurred by other drivers and passengers.
Property damage limits refer to the amount of coverage extended towards things involved in an accident. This coverage includes anything from totaling a car to knocking over your neighbor’s fence.
Keep in mind that while bodily injury insurance has a per person limit, property damage has a per accident limit. No injured individual will receive more than your total accident limit unless they seek other means of compensation.
Liability Insurance FAQs
What do the numbers 25/50/25 mean?
You’ll see these numbers on every car insurance policy, and they represent the monetary limits of your coverage. The first number represents the bodily injury per person monetary limit for one accident. In this case, 25 stands for a limit of $25,000. The second number represents your maximum coverage limit for all persons injured in a single accident. Since the second number is 50, this stands for a limit of $50,000. The third number represents the maximum coverage limit for any property damage that occurs in an accident you caused. The third number, 25, stands for a limit of $25,000.
Is 25/50/25 full coverage?
While each state sets minimum liability coverage limits for their drivers, these requirements aren’t exactly “full coverage.” 25/50/25 coverage ensures that the other driver is protected if you get into an accident, but you can’t protect your vehicle without additional collision or comprehensive coverage, which is what would make your policy “full coverage.”
What happens if someone sues you for more than your insurance covers?
You can’t force an insurance company to pay more than their coverage limits. If the damages from the accident cost more than your coverage limits, they may decide to sue you directly to receive additional compensation. If they sue you in civil court, you may have to liquidate your assets to procure the remaining amount of money.
Can you settle for more than your policy limits?
There are two ways to settle for more than your policy limits. It can happen if (1) they file a personal injury lawsuit against you, (2) or you have coverage under an umbrella policy.