What do numbers 25/50/20 mean on an insurance policy?
The numbers 25/50/20 on your insurance policy represent the monetary limits on your liability coverage
- The first number 25 stands for $25,000. This is you maximum coverage for bodily injury liability for one person injured in one accident or incident.
- The second one number 50 stands for $50,000. This is your maximum coverage for bodily injury liability for all persons injured in one accident.
- The third number 20 stands for $20,000. This is your maximum coverage for property damage liability in an accident that you caused.
Bodily Injury Liability
The first two numbers represent the highest monetary amount that your insurance company will
Pay if someone is injured. For example, if you injure one driver in an accident that is deemed your fault, your insurance company will pay up to $25,000 for that person’s medical bills. If the bills come out to $27,000 for example, you will be required to pay an extra $2,000 out of pocket.
If you’re at fault in an accident where there are 4 people hurt , the most any one person can get for their medical bill is $25,000, so all four in total would have to split $50,000 top limit.
If one person was severely injured, then that individual’s medical expenses could easily exceed your person limit of $25,000 for bodily injury liability meaning you’d b responsible for the excess medical bills your insurance didn’t pay.
With one party already receiving $25,000 in this example, it means the other three’s medical bills would be paid out of the remaining $25,000 left on your bodily injury coverage. If the total of their medical expenses exceeded your limit as well, then they also could come after you personally for this money.
Property Damage Liability
If you hit numerous cars in your accident, then you would also likely exceed your $20,000 property damage liability limit. If you totaled out a couple of cars, each worth $12,000 then the other parties would have at least $24,000 worth of claims, exceeding your property damage liability limits of $20,000 like the injuries did your bodily injury coverage.
Raising Liability Limits
In this instance these are our state’s minimum liability requirements, so it should be enough for you to register your vehicle. However they are on the low side if you happen to severely injure other people or hit multiple cars or just one expensive vehicle in an accident for which you are at fault. Low limits leave you and your assets at risk you can be held personally responsible for amounts exceeding your car insurance limits.
While financial circumstances do not allow everybody to raise their liability limits , it is recommended that you buy as much car insurance as you can afford. The insurance industry’s recommended coverage amount is 100/300/50: $100,000 per person and $300,000 per incident for bodily injury and $50,000 for property damage liability coverage.
If you select limits that are too low you could be force to liquidate property, savings and other assets or your future earnings could be attached. By purchasing liability limits to account for both your current assets and future net worth, you can help protect yourself against this risk.
Wilson One Insurance 2019