How much will Kelly have to pay out of pocket if her liability coverage limits are 50/100/50 and she causes $125,000 in injuries?

To determine how much Kelly will have to pay out of pocket, we first need to understand the structure of her liability coverage limits, which are expressed as 50/100/50. This means that her insurance will cover a maximum of $50,000 for bodily injury per person, up to a total of $100,000 for bodily injury per accident, as well as $50,000 for property damage per accident.

In this case, Kelly has caused $125,000 in injuries. Her coverage will pay for the first $100,000 of that total, as it is the maximum amount available for bodily injury per accident. However, there is a limit of $50,000 per individual for bodily injury, which means if there are multiple injured parties, the payouts cannot exceed that amount for any single person.

Since the total claim of $125,000 exceeds her liability limits by $25,000, Kelly will be responsible for the amount beyond her coverage. To compute her out-of-pocket expense, we take the total amount of claims ($125,000) and subtract what her policy will cover ($100,000). This results in $25,000 that she will need to pay out of pocket.

Thus, the correct answer clarifies