Having a 100/300/50 auto insurance policy means you have $100,000 in coverage for bodily injury liability per person, $300,000 for bodily injury liability per accident, and $50,000 for property damage liability.
What the numbers really mean
Bodily injury liability per person
Bodily injury liability per accident
Property damage liability
The first number represents the bodily injury liability per person. That is, it’s the maximum amount your insurance company will pay out for each person that is injured in an at-fault accident. With a 100/300/50 insurance policy, you are responsible to pay for any costs above $100,000.
Under bodily injury liability are medical expenses, compensation for lost wages, and legal expenses. Medical costs include hospital bills or medical expenses, follow-up physical therapy, and recovery doctor’s visits.
You will also need to compensate for any lost income while that person is incapacitated and unable to work, so your bodily injury liability helps cover this as well. Depending on what state you are in, there may be limits to how much compensation an injured person can receive. Lastly, this coverage pays for any of your legal fees.
The next number denotes the bodily injury liability per accident. Bodily injury liability per accident is the maximum amount your insurance company will pay out for a single accident.
Let’s say you were in an accident that involved three injured people, your 100/300/50 policy would cover each person up to $100,000. But if you were in an accident with more than three people, let’s say five or six, your insurance policy would only pay out up to $300,00 and no more than $100,000 for a single individual.
The third number is the property damage liability. A 100/300/50 insurance policy means your insurer will pay out a maximum of $50,000 to cover damage to another driver’s vehicle or property. Damaged property in an accident may include a mailbox, fence or building.
It’s important to keep in mind that property damage liability does not pay out to repair damages to your vehicle in the event that you cause an accident, nor will it protect any belongings inside the car or any personal property that may be damaged in the accident.
Property damage liability only covers the damages of the other driver and their property.
How much liability insurance do you really need?
Now that you understand what 100/300/50 insurance is, it’s important to understand the amount of each you need. While the bodily injury liability per person may pay for $100,000 worth of coverage, will this protect you?
Nobody likes to pay out-of-pocket expenses, so let’s look at how much coverage you need for each section.
Cover your net assets
Expenses that cover bodily injury per person and per accident can be high. In fact, if you’re in a serious car accident with multiple people who need medical care, these expenses can quickly reach over half a million dollars, if not more.
So, the best way to determine how much bodily injury liability you need is to calculate your net worth. Net worth is the total cost of everything you own minus your debts. For example, add up your assets such as any property you own, your home, stocks, money in bank accounts, bonds, and other possessions. These are your assets, or what you own.
Next, subtract out the total cost of any debts you owe. For example: Your financial obligations, mortgage loan, student debt, credit card debt, or even a personal loan or auto loan. The remaining figure is your net worth.
Calculate the cost of everything you own, and make sure your liability insurance covers at least this much to protect your assets. If you do end up paying out-of-pocket costs but cannot, your assets can be taken away.
So, by having enough protection to cover at least your net worth, you can prevent your possessions from being seized in the event that you can’t pay or are unwilling to pay.
Other insurance coverage to consider
Liability insurance only covers the other driver and their vehicle if you cause an accident. It does not help pay for your medical bills, the medical bills of your passengers, or the cost to repair or replace your vehicle. For this reason, it’s essential to have protection for yourself as well.
Along with bodily liability and property damage liability coverage, here are a few other types of auto insurance coverage you will want to consider adding to your policy. Having full coverage protects you financially giving you peace of mind while on the road.
Collision – Damage to your own vehicle isn’t typically covered under property damage liability. To help pay for any repairs to your car, you need collision coverage. If you have a leased car or an auto loan, you may be required to get collision coverage.
Comprehensive – If your vehicle is vandalized or is damaged from a hurricane or hail storm, comprehensive coverage will help pay for repairs. You will have to meet the deductible associated with this coverage, but any costs beyond that will be covered by your insurance company.
Uninsured/underinsured motorist – Uninsured motorist coverage is important because it helps pay for medical bills or vehicle repairs if an uninsured driver hits you. Underinsured coverage comes into play if you’re in an accident and the other driver is at fault but doesn’t have enough insurance to cover all the expenses.
Personal injury protection – Personal injury protection, or PIP, helps pay for expenses such as child care or lost wages that are sustained after an accident. Personal injury protection may also cover some medical expenses. Note, PIP is not available in every state.
Medical payments coverage – Also known as MedPay, this coverage pays for expenses if you require a visit to the hospital or need X-rays or surgery after an accident. Medical payments coverage also helps pay for medical costs for passengers in the vehicle.