When you are shopping for insurance, it is important to know what the numbers on your policy mean. Reading auto insurance numbers is easy, the numbers 25/50/10 define the insurance coverage limits.

The first number refers to the bodily injury for one person, the second is for bodily injury liability for all persons and the third is for property liability damage. Many states mandate these three types of coverages.

Let's break down these numbers for you and understand the coverage options in detail.

Key Highlights
  • The numbers 25/50/10 on your auto insurance policy represent the financial limits of your liability coverage.
  • The first two numbers are the highest amount of money that the insurance company will pay if someone is hurt.
  • When you have low limits on your car insurance, it means that if something happens and you cause a lot of damage, then you will be responsible for paying the cost.
  • The insurance industry recommends that you buy coverage amount of 100/300/50: $100,000 per person and $300 for bodily injury liability and $50,000 for property damage liability coverage.

What does each car insurance numbers represent?

Different car insurance numbers show different coverage limits. These numbers on your auto insurance policy represent the monetary limits on your liability coverage.

The numbers may look like:

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

Let's take 25/50/10 as an example,

  • The first number, 25, stands for $25,000. This is your maximum coverage for bodily injury liability for one person injured in one accident or incident.
  • The second 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, 10, stands for $10,000. This is your maximum coverage for property damage liability in an accident that you caused.

What is liability car insurance?

Liability car insurance is your primary coverage that helps to pay for the damage you've caused to other people and their property in an accident.

The two types of auto liability coverage are bodily injury and property damage. In most states, drivers are required to have both the coverages.

Do you need to have liability insurance?

Every state requires drivers to have at least minimum liability coverage before they can operate a vehicle. This policy protects you against certain financial losses if you are involved in an at-fault accident. It will cover bodily injury and property damage you cause to others.

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 $10,000 for that person's medical bills. If the bills come out to $12,000, 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 four people hurt, the most any one person can get for their medical bills is $10,000. So all four in total would have to split the $20,000 top limit.

If one person was severely injured, then that individual's medical expenses could easily exceed your per person limit of $10,000 for bodily injury liability -- meaning you'd be responsible for the excess medical bills your insurance didn't pay.

With one party already receiving $10,000 in this example, it means the other three's medical bills would be paid out of the remaining $10,000 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.

Read more about What is Bodily Injury Liability Coverage?

Property damage liability

If you hit numerous cars in your accident, then you would also likely exceed your $10,000 property damage liability limit. If you totaled out a couple of cars, each worth $8,000, then the other parties would have at least $16,000 dollars worth of claims, exceeding your property damage liability limits of $10,000 -- like the injuries did with your bodily injury coverage.

Read more about What is Property Damage Liability Coverage?

Raising liability limits - How much liability limits should you get?

If these are your state's minimum liability requirements, then they should be enough for you to register your vehicle.

However, they're 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.

Read our guide on raising liability limits. You'll likely find that the extra security is well worth the added cost on your car insurance rate.

While financial circumstances do not allow everybody to raise their liability limits, it's 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 putting yourself at risk financially.

To make payments for injuries or property damages that exceed your limits, you could be forced 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.

How much car insurance do I need to carry?

It’s important to get the right liability coverage limits for your car. All states have minimum legal requirements that all drivers should meet, but how much insurance you need to carry will depend on your current assets as well as the state you live in.

If you have a high risk of being involved in accidents and are financially well, you should carry high liability coverage. It also lowers the risk of losing your assets in case a lawsuit is filed against you.

To get a recommendation on what liability limits to buy, as well as whether you need optional collision and comprehensive coverage, use our "How Much Car Insurance Do You Need?" tool.