25/50. 100/300. Liability. UM/UIM. What does it all mean?

When you purchase an insurance policy, it will have limits to the amount that can be claimed against it for any given accident. Understanding you policy limits will help you to make a wise decision on how to fully protect yourself in case you are involved in an accident.

The first thing in trying to understand your policy is you really have 3 or 4 separate coverages. Collision covers your car or other cars you may have damaged. Liability covers any person you may have hurt. Uninsured Motorist (UM) and Under-insured Motorist (UIM) covers you for your injuries should someone hurt you in an accident. Some states also have a medical benefit insurance often called PIP or medpay. This helps pays for medical bills and wage loss immediately after the accident while liability is being sorted out.

So what do all the numbers next to the policy mean? You know, the 25/50. The first number, the 25, is the maximum amount that a single individual can obtain from your policy. That means any one individual can only receive $25,000 from your insurance policy for a single accident. The 50 is the global maximum amount that your policy will pay out for any single accident. If 4 people are hurt in the accident, $50,000 is the maximum that your insurance will pay between all 4 persons with not one single individual receiving more than $25,000.

It’s now time to buy an insurance policy. Remember to buy enough UM/UIM because you can’t trust other people to purchase enough of their own insurance. Your liability limits will then have to be greater than or equal to the UM/UIM coverage as you cannot insure yourself more than the general public. A good rule of thumb is a 100/300 coverage across the board. This covers almost all types of accidents you may be involved in. If you have a lot of assets, purchase even more. Just remember, the state minimum requirements are often not enough if you are hurt in a serious accident.