What do these numbers mean? Why are they important?

Your auto insurance renewal just came in the mail, and you’re reviewing your coverage. Have you ever wondered what the Liability and property damage coverage is and what those numbers are next to it and why they are so important.

Looks like this on most policies: $50,000/$100,000/$50,000 (these limits are options and higher limits can be purchased). The first two sets of numbers are for bodily injury to others. The first $50,000 is the most the insurance company will pay for any one person and the second number is the most the insurance company will pay per accident. The last number is property damage to others.

The best way to explain is with an example.

Let’s say you are on your way to work, you hit a patch of black ice going 55 miles an hour and your vehicle starts to spin out of control. Your vehicle ends up hitting another vehicle.

Guess who’s usually at fault for this situation? That’s right you are. The rules of the road state you must always maintain control of your vehicle. Maybe going 55mph when there is a high risk of black ice is not the best idea.

Let’s say the insurance companies have finalized their claim and sent your insurance company notice of what you’re responsible for paying.

Other Vehicle #1: Had $55,000 in vehicle damage and suffered a broken arm and leg, which put him out of work as a mechanic for 12 weeks. His total medical expenses and wage loss is $150,000.

Now - Let’s see what your insurance will pay.

Total Medical and wage loss.

Vehicle 1 total = $150,000 (your policy will pay a total of $50,000, because that is the policies limit per person). If there were multiple injured people in the car then the policy would pay a total of $100,000 per accident). You would be responsible to pay the remainder $100,000.

Vehicle 1 property Damage = $55,000 (The most your insurance will pay is $50,000). You would be responsible for $5,000.

I don’t know that many people can come up with $105,000 out of pocket. You may need to sell off some assets or mortgage your home.

Contact your agent today to see what your current coverage limits are and ask for the cost to increase those limits. You would be surprised at how little it costs.

By Tiffany Mulqueen