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Split Limits vs Combined Single Limits

Combined Single Limit, Bodily Injury, Property Damage and Split Limit Liability insurance are all types of Automobile Liability insurance available to consumers. Many individuals don’t realize that Liability insurance is the minimum required insurance in most states. Accidents happen. Will you have the right coverage for the situation? 

How covered are you?

First, read through your policy on your own or contact one of our agents, who would be happy to go over it with you. You can find your coverage limits and types in the policy’s exact wording, or on the declaration page at the front of your insurance packet.

Split Limit Liability coverage divides the coverage limits up over 3 areas--one amount for bodily injury per person, one amount for bodily injury for the accident and one limit for property damage for the incident. By contrast, combined single limit coverage gives you one amount of coverage to use as needed for the expenses resulting from an accident.

Split Limit Liability Coverage
A standard Split Limit Liability coverage is broken down as a 100/300/50 split. This means $100,000 medical bodily injury coverage per person, $300,000 bodily injury coverage for the entire accident and $50,000 total property damage limits.

Combined Single Limit Coverage
Combined Single Limit Liability insurance is a set number that the insurance company will pay, which includes Liability and Property Damage coverage. For instance, if you chose to carry $300,000 of Combined Single Limit coverage, you would be protected for both Liability and Property Damage coverage up to that $300,000 amount total in a single accident, regardless of how much the Property Damage is, versus the Liability payout.

The example below shows that Combined Single Limit provides the most complete Liability coverage, because there is no split differential between the three main components of personal injury, accident damage, or personal property damage.

Combined Coverage vs. Split Limit Coverage
If you have an accident and have a standard 100/300/50 split you might not be covered fully. Let's assume that your accident caused $225,000 in damages and injury. You would think that the $300,000 total accident limit would cover it, but it may not. For example, if two people were injured with $165,000 of injuries (one at $15,000, and the other at $150,000), coupled with $60,000 in physical damages, you would still be personally liable for $60,000 in payments. This is because the accident’s damages exceeded the sub-limits of $100,000 medical and $50,000 for property.

In the event of that same accident, with a Combined Single Limit Liability insurance policy, you would be fully protected. This is because your total limit is $300,000, which supersedes any type of individual limits. In other words, the entire cost of all the injuries and damages combine together to make one single payout.

Advantages and disadvantages of Single Limit Liability coverage

Advantages
If you have assets like as a home or business, a Single Limit Liability policy can prove quite advantageous.

A Single Limit Liability coverage policy can virtually eliminate the need for an umbrella policy to protect from auto insurance lawsuits. This is because having a single "pot" for claims for an accident enables an insurance carrier to divide the entire limit amount as needed according to the related claims. For example, if an accident results in a high amount of property damage but very little bodily injury, the bulk of the claims will be dedicated toward property damage claims payouts.

In many cases, carrying a Single Limit Liability coverage policy will actually result in limits that are more than adequate to cover any claims resulting from an accident. This is in contrast to Split Limit Liability coverage, which can result in a gap between actual claims and the coverage’s limits. The result can be a personal injury lawsuit against the policyholder in an attempt to recoup any unpaid expenses, which may place home and business at risk.

As illustrated in the examples above, if you are at fault in an accident and have Single Limit Liability coverage, you would not be limited by a pre-set damage amount and therefore responsible for paying the difference between what your policy covers and the balance of the claim made by the injured parties. Ultimately, Single Limit coverage can prove to be very cost effective.

Disadvantages
Single Limit Liability coverage is often more expensive than Split Limit coverage. For individuals with no assets to protect, and who wish to avoid higher auto insurance premiums, the benefits of a Single Limit Liability policy may not justify the higher premiums.

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