Split Limits

What Is a Split Limit?

A split limit is a insurance policy provision that states different maximum dollar amounts the insurer will pay for various parts of a claim. These policies, likewise alluded to as split liability policies, are normally part of the automobile insurance industry and generally accompany three types of claims: real injury per person, substantial injury per accident, and property damage per accident.

Grasping Split Limits

Most [vehicle insurance](/collision protection) companies have policies that cover various types of claims utilizing the split limit approach. This means there are three unique dollar amounts that cover every accident or occurrence including your vehicle. As referenced over, these categories are:

• Real injury per person: The maximum an insurer will pay to a single person for medical substantial injury in an accident.
• Real injury per accident: The maximum amount a company will pay to all parties harmed in a single accident.
• Damage to property per accident: The amount an insurance company pays to cover all damage to property in one accident.

The liability limits set by insurance companies are generally communicated in numbers. For instance, a split limit policy might impose limits like 100/300/50. This means the policy pays $100,000 per person per episode for substantial injury, with a maximum of $300,000 per occurrence. The limit for property damage per episode, in the interim, would be $50,000 under this policy.

However, what occurs in the event that one person looks for $250,000 in damages for their wounds? The maximum the split limit policy will pay is $100,000, even if by some stroke of good luck one person is harmed in the accident. The main way the split limit policy will pay the $300,000 maximum is in the event that three unique individuals each have $100,000 in claims.

Split limit policies set liability in numbers to address the limit per claim. For instance, a split limit policy might impose limits like 100/300/50.

Split limit policies will generally be more cost-viable options for insured parties. Since they offer smaller insurance coverage, split limit policies will quite often command lower premiums.

Split Limit versus Combined Single Limit Policies

To get more extensive coverage, insured parties can pay something else for a combined single limit (CSL). A CSL policy is something contrary to a split limit, limiting the coverage for all parts of a claim to one dollar amount.

For instance, the CSL policy might state that it will pay out $300,000 for a single claim. In that case, it doesn't make any difference whether one person claims $300,000 in medical expenses or whether three harmed parties each claim $100,000 in medical bills. The combined single limit maximizes at $300,000 one way or the other.

Having a single-limit policy can dispose of the requirement for an umbrella policy, however since this coverage is more costly, looking at the cost of the two is shrewd. Carefully consider what assets would be uncovered in the event that you are sued. Retirement accounts are generally exempt and, in certain states, your home can't be sold off to pay a judgment. This is an important part of financial and estate planning that is much of the time worth getting a professional evaluation.

Split Limit versus Umbrella Liability Policies

The coverage gave under a split limit or combined limit policy may not be sufficient. To get more extensive coverage, consider purchasing a personal umbrella liability policy. This type of insurance gives extra coverage after your automobile and homeowners insurance are exhausted.

For instance, say you're held obligated for an extravagant accident. You're found to blame for a five-vehicle automobile accident and get sued for $2 million. The $300,000 policy will barely leave a mark on the amount you owe whether it's a split limit policy or a combined single limit policy. In this case, the umbrella policy is really smart to ensure you're completely covered.

Features

• Split limit policies will more often than not have lower premiums on the grounds that they offer smaller insurance coverage.
• On the off chance that coverage under a split limit policy isn't sufficient, insured parties might think about combined single limit or umbrella liability policies.
• The policies generally accompany three types of claims: real injury per person, substantial injury per accident, and property damage per accident.
• A split limit is an insurance policy provision that states different maximum dollar amounts the insurer will pay for various parts of a claim.