What Does 50/100 Mean in Insurance?
Demystify "50/100" in insurance. Understand how these numbers define your liability coverage and apply in accident situations.
When reviewing an auto insurance policy, drivers often encounter numbers like “50/100,” which represent specific bodily injury liability coverage limits. These figures indicate the maximum amounts an insurance company will pay for damages if the policyholder is found responsible for causing injuries to others in a vehicle accident.
Understanding Liability Coverage Limits
The first number, “50,” represents a limit of $50,000 for bodily injury sustained by any one person in an accident where the policyholder is at fault. This means the insurer will pay up to $50,000 for medical expenses, lost wages, and pain and suffering for a single injured individual. This coverage extends to other drivers, passengers in other vehicles, pedestrians, or even unrelated passengers in the policyholder’s own car.
The second number, “100,” signifies a total limit of $100,000 for bodily injuries for all people involved in a single accident caused by the policyholder. This is the maximum amount the insurance company will pay out for all combined bodily injury claims from one incident, regardless of how many individuals are injured. Bodily injury liability coverage also helps cover legal fees if the at-fault policyholder is sued over the accident. This coverage does not pay for the policyholder’s own medical expenses or lost income; separate coverages, such as personal injury protection (PIP) or medical payments coverage, address those costs.
How Limits Apply in an Accident
Consider an accident where the policyholder is at fault and one person in another vehicle sustains $30,000 in medical bills and lost wages. In this instance, a 50/100 bodily injury liability policy would cover the full $30,000, as it falls within the $50,000 per-person limit. The insurance company would disburse this amount to cover the injured party’s expenses.
Now, imagine an accident where the policyholder is at fault and three people in another vehicle are injured. Suppose Person A incurs $20,000 in damages, Person B has $40,000, and Person C has $60,000. The 50/100 policy would pay $20,000 for Person A and $40,000 for Person B, as both are within the $50,000 per-person limit. For Person C, the policy would only pay up to the per-person limit of $50,000, even though their total damages are $60,000.
The total payout for the accident would be $20,000 (A) + $40,000 (B) + $50,000 (C) = $110,000. Since the per-accident limit is $100,000, the policy would cap the total payout at $100,000, leaving the policyholder personally responsible for the remaining $10,000.
Required Coverage
Liability insurance, including bodily injury liability, is mandated in most states. These state requirements establish minimum coverage amounts that drivers must carry to legally operate a vehicle. While “50/100” represents specific coverage amounts, state minimum liability limits can vary considerably.
Some states may have minimums lower than 50/100, while others may require higher amounts. Drivers must ensure their policy meets the specific minimum requirements of their state of residence.