What is the difference between ‘split-limit’ liability car coverage and ‘single-limit’ liability car coverage?
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Asked August 2, 2010
Split limit car insurance is the one most widely used by insurance companies. The reason is that it reduces the risk to the insurance company by limiting how much the company has to pay out in certain circumstances, such as enormous amounts of property damage, or severe injuries to multiple persons. To make this clearer, let's look at the way each type of insurance works, and how split limits come into play.
Split limit car insurance is divided into three parts: Bodily injury to a single person, total bodily injury available for the whole accident, and the amount of property damage liability. For example, if you found to be at fault in an accident, your coverage might supply $25,000 in bodily injury coverage to a single person, and no more than $50,000 for everyone who was injured by you in the accident, plus $15,000 in property damage. If your liability costs exceed any one of those limits, you are responsible for the additional costs out of pocket.
Single limit liability insurance means that you have one number, such as $100,000, that can be applied to all costs incurred by the accident. This amount is first applied to bodily injury to help the people who were hurt in the accident, and then the damage is paid, up to the total limit of your insurance policy. You are not responsible for out of pocket expenses until the entire amount listed on your policy ($100K in our example) has been applied to the liabilities. There is no designation of a single person limit, so the entire amount can be applied to physical injuries if necessary.
Answered August 2, 2010 by Anonymous