What 25/50/25 on Your Car Insurance Policy Means

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What do policy numbers mean?: man signing a contract

Your car insurance policy huddles in the glove compartment of your car and only comes out to make an appearance after a collision or other emergency. But if you’ve ever taken the time to get acquainted with your auto insurance card or needed proof of insurance, you may have noticed a set of three numbers separated by a dash or forward slash. They might look like this:

  • 10/20/10
  • 25-50-20
  • 50/100/50

These three numbers represent the limits of your liability auto insurance coverage and are crucial to determining whether you have enough coverage to pay for damages after an accident.

Before you renew or buy your next auto insurance policy, find out the specifics of what these policy numbers mean, which ones you should select, and what your state requires.

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What is Liability Car Insurance?

Before discussing policy limits and three-number slashes, you need to gain a basic understanding of what liability car insurance is, as it pertains to it directly. Liability car insurance is a type of coverage that protects you from financial burdens in the event of an accident. When you’re at fault in a collision, liability coverage kicks in by paying for the other motorists’ medical bills, lost wages, vehicle damage, property damage, and more under two basic terms: bodily injury liability and property damage liability.

So What Do the Three Policy Numbers Stand for?

For the sake of ease, insurance companies break down liability coverage into three numbers:

  1. Bodily injury liability per person
  2. Bodily injury liability per accident
  3. Property damage liability coverage

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.

Keep in mind that these coverage limits only pay for injuries and property damage to the other driver — they do not pay for yours. However, if you were involved in a collision where the other driver was at fault, their liability coverage would pay for your medical expenses and damage to your vehicle or property.

What Does Bodily Injury Liability Cover?

What do policy numbers mean?: damaged car on a street

As mentioned above, the first two policy numbers in the three-number slash refer to coverage limits for bodily injury liability. More specifically, this coverage pays the other motorist for the following in an accident where you’re at fault:

  • Medical costs: Bodily injury liability covers any medical expenses charged to the other motorist and their occupants after an accident you caused, including ambulance rides, hospital visits, follow-up visits, and hospital equipment, like crutches for the people who have been injured. 
  • 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. Amounts vary based on a variety of laws and external factors.
  • Legal expenses: If the other party sues you for extra damages, 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 of the person or people who passed away as a result of the accident you caused.

Note that these are paid to the other motorist. If you want coverage for your own medical bills and expenses, make sure to add personal injury protection or MedPay to your policy to cover you.

What Does Property Damage Liability Cover?

Stressed man with a damaged car behind him

The last number in the slash is property damage, which is almost always tied to the damage you cause to the other vehicle. However, it may also compensate property owners in cases where your accident isn’t directly involved with another vehicle. Here’s what property damage liability covers:

  • Vehicle damage: When you’re involved in a collision and you’re at fault, you’re responsible for paying for the damage to the other vehicle or other property. This covers anything from a simple dent in the bumper to a completely totaled car.
  • 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.

Once again, keep in mind that property damage liability limits don’t cover damage to your car or pay for any damage to your car. To receive this type of compensation, you would need to add comprehensive coverage and/or collision insurance to your policy.

Are Property Damage and Bodily Injury Liability Policies Mandatory?

Insurance agent evaluating a damaged car

All states require a minimum level of property damage and bodily injury liability except for New Hampshire, where liability insurance isn’t compulsory, and Virginia, which allows drivers to opt out of liability for $500 if they can show financial means to pay damages.

Currently, 33 states have a bodily injury liability of 25/50, making that coverage the most common state-minimum coverage requirement. Moreover, 21 states have a minimum property damage liability requirement of $25,000, which means policy numbers of 25/50/25 are the most common.

However, you should keep a watchful eye on minimum insurance requirements, as state legislatures change them frequently. And if you’re moving any time soon, check the state minimum car insurance requirements to ensure you’re legal behind the wheel.

What Happens if You Exceed Your Policy Limits?

Your property damage liability limit and bodily injury limits are 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.

To come up with the difference, you may need to sell your car, financial assets, or even your home. In some extreme scenarios, the court may even garnish your wages until your damages are paid in full. 

To avoid this dicey situation, many drivers choose to purchase additional property damage and bodily injury liability insurance on top of their state’s minimum limit. In most cases, insurers will allow liability coverage up to 250/500/250, but policyholders can expand this coverage to a maximum limit of $5 million by adding a simple umbrella policy.

What Liability Limits Should You Get?

Close up shot of a car accident

There’s no one-size-fits-all answer for how much liability coverage you should get, as long as your three policy numbers meet the state requirement. However, put this rule of thumb to use:

The liability coverage limits you get should be the highest possible that you can afford without causing financial burden.

By ensuring you have the best coverage possible that won’t hurt your finances, you hopefully won’t have to worry about possible litigation — or the idea that an at-fault accident caused another driver personal hardships. From a mental, financial, and emotional standpoint, a higher policy limit than the state minimum just makes sense — and at a rate that isn’t all that much more expensive.

Get the Policy Numbers That Give You Peace of Mind

Every driver is different when it comes to these three policy numbers. Some want the savings of lower-end coverage. Others want to make sure they’re protected to the extreme. And still, other drivers want a mix of both.

Regardless of which driver you are, you can find the policy coverage you need at the right price, but only by shopping quotes regularly. Every six months to a year, use a comparison tool like Compare.com to get the most affordable car insurance rate for your needs.

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