Question 1

What does auto insurance shorthand like 25/50/25 mean?

Accepted Answer

The three numbers represent your liability limits in thousands of dollars: the first is bodily injury per person ($25,000), the second is bodily injury per accident ($50,000), and the third is property damage ($25,000). For example, 25/50/25 means your insurer will pay up to $25K per injured person, $50K total for all injuries in one accident, and $25K for property damage.

Question 2

Is state minimum coverage enough?

Accepted Answer

State minimums are rarely enough. The average car accident costs about $20,000-$50,000 in damages, and serious accidents can exceed $100,000. If you cause an accident with damages exceeding your coverage limits, you are personally responsible for the difference. Anyone with assets to protect (home equity, savings, investments) should carry coverage well above state minimums.

Question 3

What is PIP (Personal Injury Protection)?

Accepted Answer

PIP covers your own medical expenses, lost wages, and sometimes funeral costs regardless of who caused the accident. It is required in no-fault states like Florida, Michigan, New York, and others. PIP minimums range from $2,000 (Maine) to $50,000 (Michigan, New York). In no-fault states, PIP is your primary coverage for your own injuries.

Question 4

What is uninsured motorist coverage?

Accepted Answer

Uninsured motorist (UM) coverage protects you if you are hit by a driver with no insurance or insufficient insurance. About 13% of US drivers are uninsured. Many states require UM coverage (e.g., Illinois, Connecticut, Missouri, Oregon). Even where not required, it is highly recommended since it covers you in hit-and-run accidents as well.

Question 5

How much does it cost to increase coverage above state minimums?

Accepted Answer

Increasing from state minimum to standard coverage (50/100/50) typically costs only $200-$400 more per year. Going from standard to full coverage (100/300/100) might add another $300-$500 annually. The cost increase is often much less than people expect, making higher coverage an excellent value for the protection it provides.

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