The advantages and disadvantages of split limit liability insurance need to be fully understood before an informed decision can be made between that type and single limit liability. Liability coverage is the type of insurance required by law for all automobile drivers. It is divided into three parts: property damage, personal injury per person and personal injury per accident. Liability insurance covers only damage you inflict on another party or their property. It does not include things like uninsured motorist coverage or any type of damage to your property. In the event of an auto accident, liability insurance will protect you up to a limit, and that is exactly why the difference between split limit and single limit is important.
Split Limit Liability: Pros
For starters, split limit liability is less expensive than single limit coverage. The three types of liability insurance are each assigned a value which represents the limit that the insurance company will pay out up to. So, for example, if you own split limit insurance with $25,000 personal injury per person, $50,000 personal injury per accident and $30,000 property damage, the insurer will cover expenses up to those limits. Besides coming with a less expensive premium than single limit insurance, split limit is a good way to contain costs in the event of a claim made against your insurance. Fees and settlements cannot be padded by an attorney because the insurance company will only pay out so much.
Split Limit Liability: Cons
Because split limit insurance does not consider aggregate limit liability–the total amount of coverage–if property damage you inflict is more than $30,000, it will be an expense you are personally responsible for. If the total cost of medical care for the injured party or parties after an accident exceeds $50,000, again, you are responsible to make up the difference. This is the downside to split limit liability insurance. Coverage from one of the three parts cannot be used to cover expenses that exceed another limit. Each of the three limits is only responsible for what they cover. This is why it is cheaper to insure with split limit coverage than with single limit. Single limit uses one total number–the aggregate limit–to cover expenses in whatever combination.
A minimum level of auto insurance coverage is required by law to be held by all drivers. Basic levels of coverage–including split limit liability insurance–are intended to provide a cushion in case you are to blame in an accident. By no means, however, do they protect you against the full range of possibilities where medical bills and insurance settlements are concerned. Split limit liability insurance is a more affordable option when you are looking into auto insurance, but the drawbacks include being personally liable for any and all expenses that exceed the limits you have covering you. Understanding the different types of insurance available to you will help make your decision an informed one. That way, you will have no illusions about the kind of coverage you hold and can adjust it accordingly.