Bodily Injury Liability Insurance: Calculating the Maximum Payouts in the Event of an Accident

Where you involved in a motor vehicle accident that was caused by the driver of another vehicle? If so, were you seriously injured and needed to take time off work to recuperate?

Consequently, it stands to reason that your medical bills will increase substantially, especially if you needed surgery to repair broken bones, a lengthy stay in a hospital as well time at home, allowing your body and mind to heal.

The article by Kimberly Amadeo titled, “The Rising Cost of Health Care by Year and its Causes,” notes that, in 2017, “US health care costs were $3.5 trillion.”

Thus, in 2017, the health care industry was one of America’s largest industries, equaling 17.9% of the GDP. In contrast, the total annual health care cost in 1960 was only $27.2 billion, only 5% of GDP.

According to Amadeo, these figures translate into a yearly fee of circa “$11 000 per person in 2017 versus just $147 per person in 1960”. And, she rightfully concluded that “health care costs have risen faster than the median annual income.

Consequently, the pertinent question that springs to mind is: Who is going to cover the costs of the medical bills as well as the extended time off work to recuperate?

It is also reasonable to assume that this question deserves a well-considered answer as it raises real challenges that need a solution.

Bodily Injury Liability Insurance: Counting the cost

The straightforward answer to this question is that the driver who caused the accident will have liability insurance for bodily injuries. And, as the driver’s insurance company will declare that the driver is at fault, or is the cause of the accident, they will pay for the victim’s medical bills as well as lost wages.

The caveat here is that the insurance company will only cover medical costs and lost wages up to a maximum level. Consequently, the next question that needs to be answered is: How much will the insurance company payout?

It is worth highlighting at this juncture that all US states, except for Florida and New Hampshire, require motor vehicle drivers to take out insurance to cover injuries caused by a car accident. And, according to, “each state specifies the minimum requirements for bodily injury liability.” The state in question also states its coverage limits by using a “series of numbers like 25/50.”

Essentially, these numbers can be translated as follows:

  • The first number indicates the maximum spend for one person injured in the accident. The stated policy deductible is first subtracted before the amount is paid out.
  • The second number indicates the total spend for the accident. In other words, if more than one person is injured, the total amount paid out for everyone will be the second number.

For example, if we use the figures 25/50, the policy will pay a maximum of $25 000 for one person’s total claims for medical bills and lost wages, and a maximum of $50 000 for everyone’s total claims.