The best way to understand how your coverage works is with an example.
Let’s imagine you have Colorado minimums – 25/50/15 – and you crash into a new BMW with four people in the car.
The car is brand new and has a replacement value of $55,000. Three people are injured - one with a broken leg, one with a broken arm, and one with a head injury. The injured need an ambulance (on average, an ambulance ride costs between $400-1,200 per mile!). After ambulance rides, CAT scans, and other medical treatment, injured #1’s medical bill is $25,000, injured #2’s bill is $35,000, and injured #3’s bill is $15,000.
Your coverage pays 25/50/15 - meaning $25k of bodily injury coverage per person up to a total of $50k. Injured #1’s $25k is covered by your insurance (you’re lucky - max of 25k). Injured #2’s $35k will only receive $25k of coverage (remember, you elected 25k max per person…) so you’re $10k out of pocket. Injured #3’s $15k is under $25k - so you’re covered, right? Nope.
You’ve now used up the total $50k combined bodily liability coverage provided (remember, you elected 50k total bodily injury liability), so you have to pay the entire $15k out of pocket. You’re out $25k just from someone else’s medical bills.
But what about the car? The BMW you wrecked has a replacement value of $55,000. Salvage value is $15,000. The loss is $40,000, but you elected 15k property damage. So $40,000 - $15,000 = $25,000, which is what you you now have to pay.
**In this example, you would end up paying $50,000 out of pocket because you elected minimum coverage. **
Accidents like this can happen in the blink of an eye. We highly recommend paying a few extra dollars each month for higher limits, like 100/300/50, You’ll pay much less out of pocket after an accident, and it only costs a few dollars more per month.