Limited Pleasure Use > Combined Single Limit
With most automobile insurance policies, coverage is provided in a format known in the insurance industry as “split limits.” The following are examples of Liability limits under standard automobile insurance policies:
- 50/100: $50,000 each person, $100,000 each accident, $10,000 property damage
- 100/300: $100,000 each person, $300,000 each accident, $50,000 property damage
- 250/500: $250,000 each person, $500,000 each accident, $100,000 property damage
Under these “split limit” policies, it’s possible to have $300,000 worth of coverage on your automobile and not be fully covered for an accident with $279,000 worth of bodily injury and property damage.
Let’s say you have 100/300 Liability limits on your standard automobile insurance policy and you cause the following accident:
- The other driver’s brand new $100,000 Mercedes Benz is totaled.
- The other driver is injured and requires $29,000 worth of medical care.
- The other driver’s passenger is injured and requires $150,000 worth of medical care.
The total cost to settle the bodily injury and property damage caused by the accident is $279,000. This is why you carry automobile insurance: to protect you from financial ruin in case of disaster. Unfortunately, your $300,000 worth of insurance does not cover the entire cost because your $300,000 “per accident” insurance limit is split into property damage and per person “sub-limits” which you probably never gave much thought to.
How This Scenario Plays Out:
- The totaled Mercedes Benz is considered property. Because you have a Property Damage sub-limit of $50,000 on your policy, your insurance will only pay for half the cost of replacing the automobile. This leaves you responsible for the remaining $50,000.
- The injuries of the other driver, requiring $29,000 worth of medical care, will be paid in full by your insurance as this cost fits under the $100,000 per person sub-limit.
- The injuries of the other driver’s passenger, requiring $150,000 worth of medical care, will not be paid in full by your insurance. Because of the $100,000 per person sub-limit, you will be responsible for the remaining $50,000.
- Due to the property damage and per person sub-limits, your insurance carrier is only required to pay $179,000 of the total costs. You are then responsible for the remaining $100,000. While the other driver may have Uninsured/Underinsured Motorist coverage that will pay the remaining $100,000, you can expect their insurance carrier to take you to court to collect as much of that money as possible.
Combined Single Limit
With a Select Automobile Insurance Policy, there are no sub-limits. The three Liability limits listed above would instead look like this:
- $100,000 each accident
- $300,000 each accident
- $500,000 each accident
Rather than dealing with three sub-limits, you have one combined single limit. In the disastrous example discussed above, a combined single limit policy of $300,000 would pay the entire costs of the accident.
Counterpoint
Reading the above, it seems a simple thing to say that a Combined Single Limit is the way to go. But is it? This link explains a different scenario, and then we can throw in the Umbrella policy - which many people have - that may relieve you of the need to load up on expensive per-auto Liability charges in favor of the single-charge, over-arching protection that an Umbrella provides.
Your personal circumstances will dictate that one choice or the other is the better fit for your needs. Leland-West offers both types of coverage limit, so you can decide whats best.
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