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