Automobile Insurance Coverage - Your Automobile Insurance Coverage Explained

The typical automobile insurance coverage has three limitations that may be listed as 25/50/25. Many consumers have no idea what these numbers mean, which is unfortunate because they are critically important. These three numbers can mean the difference between having enough coverage and financial disaster.

The numbers listed above are the coverage limitations on your insurance policy. The first number, in this case 25, stands for the $25,000 dollars which is the maximum your insurance policy will pay out to one person involved in an auto accident. This includes medical bills, bodily injury, and lost wages to any person who was injured in an accident you were responsible for. If the person has bills that exceed $25,000 dollars you may be held responsible for paying them out pocket.

The next number, in this case 50, represents the $50,000 dollars that your insurance company will pay out per accident to all parties involved. So if you ran a red light and hit a car with four people in it your insurance company will pay out a maximum of $50,000 dollars to the four people in the other vehicle. Again you may be held responsible for any monetary compensation that exceeds $50,000 dollars.

The last number, again 25, stands for the $25,000 dollars your auto insurance policy will pay for damage to another person's automobile or property. If you total a $50,000 dollar car and have a $25,000 dollar maximum you may be held liable for the other twenty-five thousand dollars that the car is worth.

The above coverage limitations are probably not enough to protect your financial assets in the case of a serious accident. It is a good idea to increase your coverage level and it will probably only cost you a few extra dollars per year. Automobile insurance coverage is too important to have low coverage limitations on your policy.

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