Split Limits vs. Combined Single Limits

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[Below is a transcript of the podcast]

Hi, this is in Margaret Perkins with Perkins law firm and I’m going to be talking today about the difference in Split Limits and Combined Single Limits on your insurance policy. When you buy a liability insurance policy, the deal you make with the insurance company is that you will pay a premium, in exchange for which, the insurance company will pay up to a certain amount for any damages that you may cause as an at-fault driver. You can have those limits written either as what is referred to as split limits or a combined single limit. Most people are familiar with and purchase split limit liability insurance and you can determine what you have by looking at your declarations page that comes with your automobile insurance policy and see how that is represented.

If it is split limit coverage it will be broken down as for instance 100/300/50. If it is combined single limits it will be listed as just one figure. For example $300,000. A combined Single Limit policy provides coverage for personal injury and property damage. Let’s say that you have a $300,000 combined Single Limit policy and that you cause a wreck where you damage two other cars and one person in each of those cars. Say each of those cars costs $30,000 and they’re totaled and that each of the people you injure has claims of $100,000 each against you. You add up all those damages. That’s $260,000. That is less than your combined single limit of three hundred thousand dollars. Your liability insurer would pay $30,000 to each of the people whose car was damaged and $100,000 to each of the people who were injured. And that would totally handle the claims against you within your limit of coverage.

Let’s take that same example and say you had split limit coverage of 100/300/50. What that means is the $100,000 is the most your insurance company will pay any one person that you injure. $300,000 is the most they will pay regardless of the number of people injured and $50,000 is the most they will pay on your behalf for property that you damage. So with split limit coverages of $100-$350, your coverage would not be sufficient to pay the property damage claims against you because the most they would pay total is $50,000. And the two property damage claims against you are $60,000. The $100,000 per person bodily injury liability limit would, however, be sufficient since each of the two claims against you are $100,000 each. That’s not to say that a combined single limits policy will always protect you in the split limits policy won’t.

Let’s take another example. Say you have a 100/300/50 split limits policy and $100,000 combined single limits policy. Take the same example as before. $60,000 in property damage and two $100,000 bodily injury claims against you. You’re 100/300/50 policy would not be sufficient to cover all of the property damage. But again it would be sufficient to cover all of the bodily injury claims against you.

Where the $100,000 combined single limit policy would only have $100,000 total to pay out in $260,000 worth of claims. There are advantages and disadvantages to each of these types of policies and you may want to talk with your insurance agent about which is best for your particular situation and for your budget. But understanding what the choices are that are out there may help you to make decisions about the type of liability insurance limits that you would like to have. Hope this has been helpful to you. If we at Perkins Law Firm can ever assist you in any way with regard to bodily injury or wrongful death claims please feel free to call us at 770-728-6932. Or visit our website, injuryispersonal.com