Liability auto insurance comes in two flavors: Split limited and single limit or combined liability insurance
Once you buy a car, you normally have to provide proof of insurance to get it registered with the Department of Motor Vehicles (DMV) in your state. They will require that you bring in certain documents to get your car processed and if you have all the right material, this can be a fairly simple process. On the other hand, buying insurance may seem like a daunting task and you might wonder where you should even start? If you’re unsure, start doing some research.
Almost all states require that drivers have a minimum limit of insurance and this is often referred to as liability insurance. This is going to cover any physical damage or bodily injury to another party for an accident you cause. You should know that this will likely not cover all your expenses if you get into an accident. It’s better to opt for more complete coverage but you have to make certain decisions about your liability insurance before you start thinking about other add-ons. If you go to purchase liability insurance, you will be offered two choice: split limit liability insurance or combined/single limit liability insurance.
Buying Liability Insurance for Your Car
When you buy your insurance, you select a certain dollar amount of coverage for your policy. This dollar amount is going to be part of what determines the premium you pay. It may be attractive to select less coverage so your monthly or annual premium is less expensive but if you get into an accident that causes $250,000 worth of damage and you only have $50,000 worth of coverage, you may regret your decision.
What is Split Limit Liability Insurance?
If you are in an accident, there are two portions of your insurance policy that will cover the other person: bodily injury and property damage. A split liability policy is going to divide your coverage amounts into three categories: injury per person, injury per accident, and property damage per accident. You can select different coverage amounts for each category. The
injury limit per person is going to cover the injuries you cause to one other person. The injury limit per accident is going to cover the injuries that you cause when the accident involves two or more people. The property damage per accident will cover exactly what it sounds like: how much damage you cause in each accident. This may
mean that you have a $50,000 injury limit per person, a $150,000 injury limit per accident and a $75,000 property damage limit per accident.
What is Combined/Single Limit Liability Insurance?
Single limit liability insurance still relies on the two categories of coverage but it just combines your policy amount into a lump sum. This means that if you were to get in an accident any amount of damage that you caused, whether it was bodily injury or property damage, would be deducted from that total. It will still apply on a per accident basis. For example, let’s say
you have a single limit coverage amount of $200,000 and the estimate of the victim’s bodily injuries totals $75,000 while their property damage is going to come in around $52,000. You will be covered because the total of those two combined ($127,000) does not exceed $200,000.
What are the Differences Between Single Limit and Split Limit Policies?
The major difference between the two types of coverage is that one requires multiple limits while the other is one set amount. With split liability policies, you will find that the individual coverage amounts are much lower than what you could have with a single limit policy. Because the insurance company will not have to pay out as much money with a split limit, the rates are often lower.
You should be aware that because
the rates are lower though, there is a chance there could be a discrepancy in the amount of the claim and the amount of coverage you have. If that happens, you may find yourself with a lawsuit on your hands if the victim is trying to claim the remaining amount of damage. On the other hand, if you have a single limit policy, you can normally set a much higher limit and use it for whatever the accident requires. Single limit policies are going to cost more but it can also provide you peace of mind that you have a good amount of coverage no matter what happens.
Making a Choice
When you decide between split limit or single limit liability insurance, consider what personal factors play into your decision. If saving money is your single driving motivation, then going with a split limit policy is going to be the best bet for your wallet. Just make sure you have high enough amount to cover each category. Medical expenses are through the roof in these times and the value of a car is nothing to bat an eye at. Upping your limits just a little won’t cost that much more.
If protection is your main goal, a single limit policy is going to work best for you. The amount of damage, either bodily or property, can vary per accident and you have the flexibility to apply your coverage as it’s needed. While it’s true that it may be more expensive to begin with, you may end up saving tons of money if you’re in a serious accident. No matter what, the most important thing you can do is make sure you are insured properly.
