What is the difference between "split-limit" liability car coverage and "single-limit" liability car coverage?
Split-limit coverage uses three numbers to specify the limits for:
1. bodily injury liability for each person
2. bodily injury liability for a single accident (regardless of how many people are involved)
3. property damage liability
The single-limit coverage gives one number that is the maximum coverage for bodily injury and property damage altogether – regardless of the number of people involved or amount of property damage.
Split Limit Liability.
Split limit liability sounds like a confusing term. Though once broken down, it is not. Split limit liability insurance uses three different amounts for three different aspects of your coverage -- individual bodily injury, bodily injury for an accident (no matter how many people are involved in it), and property damage liability.
Split limit liability car insurance is generally more expensive than single limit liability, but in turn you get much more coverage for yourself, your family, and in the event of an accident, the person who you are involved with. You can, for example, set a high limit for your personal injury, but a lower limit for your property damage if you have an older car that isn't worth as much money as one that's only one or two years old.
This type of car insurance lets you choose what you want to cover based on your needs and expenses, and is therefore the ideal choice for budget minded people, parents, and people who frequently drive with many people in their cars.
Traditionally split limit liability has been the method used to determine liability coverage maximum claim payments. However, there are both advantages and disadvantages to this approach to auto insurance liability coverage that should be considered when purchasing car insurance.
Advantages of Split Limit Liability Coverage
One of the primary advantages of split limit liability is that very often it is much less expensive coverage than single limit liability coverage. For individuals who are looking for ways to save money on their auto insurance, a traditional split limit coverage policy may be much more attractive than a much more expensive option like single limit coverage.
Another benefit to choosing split limit liability coverage is that it is one method of cost containment for payouts for accidents. Claimants may simply choose not to press for higher claims because of the policy limits that a split limit policy provides. The temptation for a claimant (or claimant’s attorney) to pad a bill in an attempt to collect the maximum limit may be removed simply because the limits will be lower with a split liability coverage policy.
Disadvantages of Split Limit Liability Coverage
The disadvantages of a split limit liability coverage auto policy are substantial. In today’s economy, the limits provided by traditional policy limits may simply be inadequate to cover all of the expenses involved in an auto accident. For example, for property damage alone, car values often top higher than $50,000 or more. If an accident involves more than one car, then the claim can skyrocket beyond belief. Add to that the potentially astronomical costs for any major medical treatment and it quickly becomes obvious that split limit liability coverage will most likely prove woefully inadequate for any sort of major accident.
When limits are expended, it is possible for major assets like a business or home to be at risk should a claimant decide to file a personal injury law suit. Even if a homeowner has an additional umbrella car insurance policy, this is an additional expense that they incur every time they renew their insurance policy.
Single Limit Liability
Simply put, single limit liability uses the same total number for everything.
Single limit liability is the simplest kind. What it means is that you have one total number for your bodily injury and property damage, regardless of how many people are involved. So for example, if your liability limit was $50 000 and you had a family you travel with often, it might not be the ideal type of coverage for you, because each person in your car deducts from your amount, meaning that if something serious happens, and more than one person needs medical attention, you may not have enough coverage.
This type of auto insurance is best for single people who often travel alone, and isn't advised for families, as it could leave you not covered in many common situations. Always ask your auto insurance agent what's best for you and make sure you get the right prices.
Single limit liability coverage is auto insurance that provides one flat rate amount for coverage limits. For example, a policy owner may choose total per incident liability coverage of $250 000. This amount would include any and all claims for a single accident for bodily injury and property damage. Also, the limit would be applied for everyone involved in the accident, so that everyone would share in the limit of $250 000 in our example.
Advantages of Single Limit Liability Coverage
For individuals with assets such as a home or business, a single limit liability policy can have several distinct advantages. Very often, if you have assets to protect from potential law suits, you will automatically carry an additional umbrella insurance coverage, which is an added expense.
However, a single limit liability coverage policy virtually eliminates the need for an umbrella policy to protect from auto insurance law suits. 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. Therefore, if, for example, 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 that result from an accident. This is in contrast to split limit liability coverage, which very often results in a gap between actual claims and limits on the coverage. The result of this situation is very often a personal injury law suit against the policy holder in an attempt to recoup any unpaid expenses, placing home and businesses at risk.
Disadvantages of Single Limit Liability Coverage
The primary disadvantage of single limit liability coverage is that it is 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 will probably not outweigh the benefits enough to justify the higher premiums.
Another disadvantage to a single limit coverage policy is that resolution of claims may take longer, particularly in especially large accidents or ones that involve several different claimants. Since all of the claims are being pulled from a single limit amount, the insurance company may require that all claims be submitted before settling and closing out the case.