What is Split Limit Auto Insurance And How Does it Work?

What is Split Limit Auto Insurance And How Does it Work?

November 28, 2022

Split-limit auto insurance applies to liability insurance, which covers harm incurred to other parties in the case of an accident. Each state has a minimum provision on how much liability insurance you need from an at-fault accident to cover personal injury and property damage costs. A split-limit liability policy specifies the maximum amount the insurance can pay after your deductible to cover such claims.

The name “Split Limit Liability Insurance” comes from how it operates. You’ll typically see liability coverage options written as a three-number split as you browse around for auto insurance quotes. 

Your overall coverage limits are broken down into three categories:

  • Body damage per person: This is the maximum cost per person in a given accident that the insurance can pay out for hospital costs or medical expenses.
  • Bodily injury per accident: Depending on the per-person cap, this is the maximum amount the insurance can pay out for medical costs or medical expenses per accident.
  • Property damage per accident: This is the maximum amount per accident the insurer can payout for property damage coverage.

So let’s look at an instance of how it breaks down. Let’s presume you have a 100/300/50 Split Limit Insurance Policy. This means you have the limits below.

  1. $100,000 gross coverage for bodily injury per person
  2. $300,000 gross coverage of bodily harm per accident
  3. $50,000 gross loss cap to property per accident

If you look at this coverage and conclude that you are guaranteed a maximum of $450,000, think again. Split limit auto insurance limits payouts per payout form to the maximum collection. To explain how the maximum coverage levels relate to each other, let’s look at a few examples.

  • Scenario 1: Three occupants in the other car have $90,000 worth of personal injury lawsuits after an accident. This would be covered because the claim of each individual is within the $100,000 per-person limit, and the three claims total less than the bodily injury per-accident limit.
  • Scenario 2: Two people in the other car have $120,000 worth of personal injury lawsuits after an accident. While for each crash, this is less than the $300,000 bodily injury limit, the claim of each injured passenger is higher than the per-person limit. This means that this proposal wouldn’t cover the whole number.
  • Scenario 3: Four occupants in the other car have $80,000 worth of personal injury lawsuits after an accident. Looking at the per-person limit, you might assume that you have the correct amount of coverage: this falls below the per-person limit. However, the entire amount ($320,000) will not be compensated because this provision restricts bodily injury payouts to $300,000 overall.

Knowing how these two limitations operate together, as you can see in scenarios 2 and 3, is very useful in understanding the actual coverage and risk.

split limit liability

Combines Single Limit vs. Split Limits 

The combined single-limit insurance plans vary significantly from split-limit policies. While split limits vary between a maximum compensation per person and per accident for bodily injury and property harm, a single combined limit is more like the amount of lump-sum coverage.

With a single accident, the cumulative single-limit liability coverage sets a maximum compensation number, no matter what the liability payout is for. So a combined single limit insurance policy of $300,000 will cover up to that amount, whether it is all property harm, all bodily injury claims of one person, or a mix of the two.

Drivers that own property or other properties that could be at risk in a lawsuit profit the most from a mixed-limit approach. While higher premiums come with this form of insurance, it may take the place of an umbrella policy and reduce the possibility of any discrepancies between the cost of a claim and the insurance cap.

On the other hand, combined policies for single limits are usually more costly than policies for split limits. The lower insurance cost with a split limit insurance policy could better suit your needs if you don’t have assets that could be at risk after a lawsuit.

Make certain that you’re covered

Only one aspect of having the best car insurance policy for you is knowing your split-limit insurance and finding the right liability coverage. 

Split limit insurance