Auto Coverage: Who Gets Paid, and How Much

Auto insurance answers two separate questions. First, whose loss is this? Second, how much will this policy pay? This lesson teaches you to sort a loss into the right coverage, then use stated limits to calculate what the policy pays and what it leaves unpaid.

What you will be able to do

- Tell the difference between paying for harm you cause to others and paying for damage to your own car.

- Separate collision losses from other-than-collision losses.

- Read a split limit such as 50/100/25 when its meaning is stated.

- Calculate a bodily injury payment for two or more injured people, and a property damage payment.

- State the part of each loss that this policy does not pay.

Before you start: A policy is the insurance contract. The insured is the person the policy protects. A limit is the most the policy will pay for a type of loss. A deductible is the part of your own covered loss that you pay before the insurer pays. You only need addition, subtraction and comparison.

Sorting the loss: others or your own car

Liability coverage pays for harm you cause to other people. "Liability" means legal responsibility. If you cause a crash, liability coverage helps pay the people you hurt and the property you damage. It does not pay to fix your own car.

Liability has two parts:

- Bodily injury liability: pays for injuries you cause to other people.

- Property damage liability: pays for damage you cause to someone else's car or other property, such as a fence.

Your own car needs its own coverage. There are two kinds:

- Collision: pays for damage to your car when it hits another car or an object, or rolls over.

- Other-than-collision, often called comprehensive: pays for damage to your car from something other than a collision. Examples can include theft, fire, vandalism or hitting an animal such as a deer.

A deductible may apply to either one. In every case, the actual policy wording and the facts decide what is covered.

The tempting mistake: "I have liability, so my car is covered." No. Liability faces outward, toward other people. If you have liability coverage only, the damage to your own car is not paid by this policy.

A second mistake: "Any damage to my car is collision." No. Ask what caused the damage. If your car hit a car or an object, that is collision. If the car was stolen or burned, that is other-than-collision.

Reading a split limit

A split limit lists separate caps as three numbers. In this lesson, assume that 50/100/25 means:

- $50,000: the most paid for bodily injury to each person.

- $100,000: the most paid for bodily injury to all people together in one accident.

- $25,000: the most paid for property damage in one accident.

These numbers are invented for practice. They are not a legal minimum or a recommendation. No single minimum applies in every state; each state sets its own requirements.

Worked example: two injured people

Dana's policy has the assumed 50/100/25 limits. Dana causes a crash. Liability applies, and the costs are:

- Person A's injuries: $70,000

- Person B's injuries: $20,000

- The other driver's car: $18,000

- A homeowner's fence: $9,000

Step 1: Cap each person. No one person can receive more than $50,000.

- A: $70,000 is more than $50,000, so A gets $50,000.

- B: $20,000 is under $50,000, so B gets $20,000.

Step 2: Total, then compare with the accident cap. $50,000 + $20,000 = $70,000. That is under $100,000, so the policy pays $70,000 for bodily injury.

Step 3: State what is left unpaid. Total injuries were $70,000 + $20,000 = $90,000. $90,000 − $70,000 = $20,000 unpaid by this policy. All of it is A's.

Why the order matters: The $100,000 is a cap on the total. It is not a fund that any one person can draw from. A's $70,000 fits under $100,000, but A is still capped at $50,000. Also, the caps are not added together: this policy never pays $150,000 for injuries.

Step 4: Handle property damage separately. $18,000 + $9,000 = $27,000. The cap is $25,000, so the policy pays $25,000, and $2,000 is unpaid. Unused bodily injury room cannot be moved to property damage.

Dana's own car is not paid under liability. It would need collision coverage, subject to any deductible.

Change one fact

Keep everything the same, but now B's injuries are $65,000.

- A is capped at $50,000. B is capped at $50,000.

- $50,000 + $50,000 = $100,000, exactly the accident cap.

- Total injuries: $70,000 + $65,000 = $135,000. Unpaid: $135,000 − $100,000 = $35,000.

Both caps now matter. The per-person cap limits each person, and the totals have reached the accident cap.

Checkpoint 1

Jordan backs into a light pole. Jordan's bumper and the pole are both damaged. A week later, Jordan's car is stolen. Which coverage fits each loss?

Answer: which coverage applies

- The pole belongs to someone else, so it falls under property damage liability.

- Jordan's bumper was damaged when the car hit an object, so it falls under collision.

- The theft did not involve hitting anything, so it falls under other-than-collision.

One event can involve two coverages: one for the other party's property and one for your own car.

Checkpoint 2

Assume limits of 50/100/25. The insured causes a crash that injures two people: $35,000 and $90,000. How much does the policy pay for bodily injury, and how much is unpaid?

Answer: per-person cap controls

Cap each person first: $35,000 stays $35,000. $90,000 is capped at $50,000. Total: $35,000 + $50,000 = $85,000, which is under the $100,000 accident cap, so the policy pays $85,000. Total injuries were $125,000, so $40,000 is unpaid.

If you answered $100,000, you let one person exceed the per-person cap.

Checkpoint 3

Assume different limits: 30/60/15, meaning $30,000 per person, $60,000 per accident for injuries, and $15,000 per accident for property damage. Three people are injured: $40,000, $25,000 and $20,000. The other car's damage is $12,000. Find the bodily injury payment, the property damage payment and the unpaid amounts.

Answer: accident cap controls

Bodily injury: Cap each person: $30,000, $25,000 and $20,000, which totals $75,000. That is more than the $60,000 accident cap, so the policy pays $60,000. Total injuries: $40,000 + $25,000 + $20,000 = $85,000. Unpaid: $85,000 − $60,000 = $25,000.

Property damage: $12,000 is under $15,000, so the policy pays $12,000, and nothing is unpaid. The $3,000 of property limit left over cannot be used for injuries. (How the $60,000 is divided among the three people is not covered here; this question asks only for the total.)

Checkpoint 4

A driver says: "My policy has $25,000 property damage liability, so it will fix my $6,000 dented door after I hit a wall." Is the driver right?

Answer: liability faces outward

No. Property damage liability pays for damage to other people's property. Hitting a wall is a collision, so the driver's own door would need collision coverage, subject to any deductible.

What to remember

- Liability pays others: bodily injury for people, property damage for their things.

- Your own car needs collision (it hit something or rolled over) or other-than-collision (theft, fire, vandalism, animal contact, for example).

- With split limits, cap each person first, then compare the total with the accident cap. Never add the caps together.

- Calculate property damage separately, against its own cap.

- Always state what is left unpaid: the total loss minus what the policy pays.

- Limits in practice problems are assumptions. Real requirements depend on the state, and real coverage depends on the policy.

Sources

- Washington State Office of the Insurance Commissioner, "Learn how auto insurance works," https://www.insurance.wa.gov/insurance-resources/auto-insurance/how-auto-insurance-works/learn-how-auto-insurance-works (checked 2026-11-05). Used only for the distinctions between collision, comprehensive, bodily injury liability and property damage liability.