Split Limits

Split Limits in insurance refer to dividing the coverage for bodily injury liability and property damage liability into separate amounts. This means that your policy will have separate limits, for example, $100,000 for bodily injury per person, $300,000 for bodily injury per accident, and $50,000 for property damage.

Example #1

For example, if you have a split limit policy of $100,000/$300,000/$50,000 and you cause an accident that injures two people, one with medical expenses of $80,000 and the other with medical expenses of $50,000, the policy would cover both individuals' bodily injury expenses up to the $100,000 per person limit, but not beyond the $300,000 per accident limit.

Example #2

Another example would be if you cause property damage in an accident and the repair costs amount to $45,000, the property damage coverage within the split limit policy would cover the full $45,000.

Misuse

Misuse of split limits could occur if an insurance company offers extremely low limits for either bodily injury or property damage, leaving consumers inadequately protected in case of a severe accident. It's crucial to ensure you have sufficient coverage to protect yourself and others in the event of an accident.

Benefits

The benefit of split limits is that they offer flexibility and customization in choosing the coverage amounts for different aspects of liability. This allows policyholders to tailor their insurance to better suit their needs and potential risks.

Conclusion

Understanding split limits is essential for consumers to make informed decisions regarding their insurance coverage. By selecting appropriate split limits, individuals can protect themselves, their assets, and others involved in potential accidents.

Related Terms

Bodily Injury LiabilityProperty Damage Liability