10/20/10 insurance represents the limits on your liability coverage. These numbers are the maximum that an insurance company will pay out per accident in tens of thousands of dollars. Once you know what the different amounts mean, you can decide whether or not you have enough coverage.
How the Numbers Break Down
The first number listed is the maximum bodily injury that the company will payout to a person who has been injured in an accident or incident. If you have 10/20/10 insurance, your insurer will payout up to $10,000 per accident for bodily injury. However, if the victim’s injuries resulted in medical bills totaling more than $10,000, you would have to pay that amount out of pocket.
The next number, which stands for $20,000, is the maximum amount of money your insurer will pay for everyone injured in an accident or incident. Anything that exceeds this amount, or exceeds $10,000 for a single person, would have to be paid out of pocket, according to Paradiso Insurance.
As stated by Carinsurance.com, the final number represents the coverage maximum that your insurer will pay for property damage that occurred as the result of an accident. If you have 10/20/10 coverage, your insurer will cover up to $10,000 for damaged property if you are at fault for the accident.
This amount can be used up rather quickly, especially if you are involved in an accident that involves multiple vehicles. Vehicle damage can quickly add up, and if you total one or more in an accident, you will easily exceed the $10,000.
How Much Coverage Do You Have to Carry?
10/20/10 insurance is the minimum amount that most states require you to carry in order to register your vehicle and legally operate it. However, it’s important to note that this level of coverage is rather low when compared to the costs of liability in the event of a major accident.
Matt Law explains that any accidents involving multiple people or vehicles or an expensive vehicle–and you are determined to be at fault–the minimum coverage is not likely to be enough, and you will be responsible for any overages.
How High Should Your Coverage Be?
As stated in Florida Risk Partners, most people tend to skimp on car insurance because they can’t afford high coverage limits. While a good rule of thumb is to obtain as much coverage as you can afford, insurance companies recommend that you opt for 100/300/50 if possible. With this type of coverage, an individual could be paid $100,000 towards medical benefits or multiple people could be paid up to $300,000 total. It also provides up to $50,000 for property damage, which will likely cover most vehicle repairs.
$100,000 or $300,000 should cover medical bills for most types of injuries sustained in a vehicle accident, which means you are less likely to have pay expenses out of pocket. Compare these limits to those offered in a 10/20/10 policy, and the level of risk you’re assuming becomes clear. Paying less money for your policy up front can spell financial disaster down the road.
Uninsured/Underinsured Motorist
Other coverage that may be needed in the case of liability is uninsured or underinsured motorist. These policies are typically available in the following limits:
This added coverage will help to protect you in an accident with an at-fault driver who is uninsured or underinsured. An uninsured/underinsured add-on will cover medical bills and property damage as if the other party were properly insured.
Personal Injury Protection
In states that have no-fault coverage, personal injury protection, or PIP, coverage is required. PIP policies will be the first policy used for injury payment after an accident, and the money will be paid out no matter who was determined to be at fault for the accident.
After PIP coverage kicks in and the medical payment coverage has been exhausted, the driver deemed at fault would be responsible for coming up with the additional funds to cover the balance of the medical expenses. For example, if a driver had the minimum PIP coverage in the state of Florida, along with coverage for $5,000 in medical payments, PIP would cover up to 80% or $10,000 of the bills. Then, the remaining $5,000 from the medical coverage could be used.
If you are involved in an accident with more significant injuries, then you could end up paying more. Using the same amounts of coverage above and assuming the medical bills for the injured party were $25,000, PIP would cover the first $10,000, their medical coverage would cover the next $5,000, and you would be responsible for the remaining $10,000.
In many states with no-fault insurance, PIP limits tend to be higher, usually enough to cover serious injuries that may require long-term recovery or care. Common coverages for PIP in no-fault states are:
In some cases, higher limits such as $500,000, $1,000,000, and even unlimited policies can be purchased, which can provide coverage in the event of catastrophic injury.
No-fault Coverage
According to Wallace, Welch, & Willingham, when you live in a state with no-fault insurance, your coverage will be the first to cover the expenses surrounding an accident. If the limits for that coverage are used up, then medical payment coverage would go into effect. However, if you have suffered a major injury and exhaust all of those funds, you can try and seek coverage from the other party’s liability insurance if they were deemed at fault.
10/20/10 insurance represents the minimum liability coverage limits for most states. While this level of coverage is often enough to let you register and legally operate a vehicle in the state, it might not be enough to provide you with the coverage you need in the event of an accident. When buying any kind of insurance policy, you have to assess the level of risk.
Check this out if you need additional information, resources, or guidance on car insurance.
Sources:
What 10/20 Insurance Policy Means
What do the limits on my auto liability policy mean?
Understanding the Florida No-Fault Law
Understanding The Auto Insurance Term: 20/40/10 vs 25/50/25
Auto Insurance Medical Coverage: Everything You Need To Know
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