Auto Insurance: Split Limits Vs. Combined Single Limit
We often find that new clients come to us having focused more on their auto policy’s annual renewal premiums rather than the actual coverage provided. I feel that’s more of an issue with industry-wide advertising being largely centered around pricing.
However – it brings up an opportunity for us to discuss coverage, which ultimately determines a significant portion of the premiums on your auto policy. When asked about their preference of split auto limits versus combined single limits, most clients aren’t even aware there was another option available.
The reality is that there most certainly is a difference not only in the dollar amounts of coverage, but also how those limits can effectively be utilized if you find yourself in an accident.
It’s critically important to understand that fully in order to choose what’s right for you:
Split Limits
Here’s an example of an auto policy with split limits: ($100,000 / $300,000 / $100,000)
Bodily Injury – $100,000 each person / $300,000 each accident
- $100,000 of total coverage for each person’s injuries / $300,000 of total coverage for injuries from each accident
Property Damage – $100,000 each accident
- $100,000 of coverage per accident for damage to others’ property
Limitations:
- If you’re in an accident and cause more than $100,000 of bodily injury to any one person, you’d be out-of-pocket to cover those excess costs
- If you’ve injured more than one person in an accident
- Policy will only pay $100,000 for any one person’s injuries
- It’s quite possible the total of all injuries could exceed the amount of coverage available per-accident, leaving you to cover the rest
- Property Damage
- Some luxury vehicles can cost well above $100,000 per car
- If you’re at-fault in an accident with the wrong vehicle, it could exceed your coverage limits leaving you out-of-pocket to cover the remainder
Combined Single Limit
Here’s an example of an auto policy with Combined Single Limits:
$500,000 Combined Single Limit Per Accident – Bodily Injury and/or Property Damage
Combined Single Limit coverage offers no specified limits per-person, per-accident, or for property damage to restrict coverage. With one combined limit of coverage, it gives you the flexibility to use your limit more effectively where it’s most needed. It’s seen as a stronger form of coverage as it gets rid of some of the potential gaps/limitations listed above that come with with carrying split-limits.
Excess Liability Coverage
Coverage from Excess Liability or Umbrella policies applies only after your limits on your primary auto policy are exhausted.
However, there’s often requirements that you hold a minimum amount of coverage on your auto policy in order to purchase excess policies (such as $250,000/$500,000/$100,000 Split Limits OR $300,000 Combined Single Limit).
The more primary coverage you carry on your auto policy, the more leeway you have before utilizing your excess limits. If you can avoid utilizing your excess coverage in a claims scenario, it will improve your claims history and greatly benefit your overall risk profile for the future making it easier to obtain coverage at the best possible rates.
Call Us Today
We’ll help you explore available options, explain key differences, and help you make the best decision possible. When it comes to auto insurance, there’s no one-size-fits-all approach, and it’s important to be aware of coverage differences when reviewing your policies or making a purchasing decision.
Reach out to our team today for a no obligation review of all your insurance policies, and let us help customize a program just for you.
