• Weighing the Differences Between Single-Limit and Split-Limit Liability Car Insurance

    Single-limit liability is one way of determining the limit of coverage in the event of an auto accident. Also known as combined single-limit liability, it is distinct from split-limit liability. Single-limit liability insurance is an alternative to the conventional “spilt limit” coverage, where split-limit is the norm. An insurer often provides split-limit liability as a way to pinpoint coverage for different aspects of liability insurance: personal injury and property damage.

    With single-limit liability, there is one amount of insurance that covers property damage and personal bodily injury combined, as opposed to split-limit which divides it up into three numbers.

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    If you elect to be covered with single-limit liability, it means your insurance coverage is pooled together. The law requires a minimum amount of property damage coverage per accident, bodily injury coverage for each person and bodily injury for a single accident no matter how many people are injured. Split-limit separates these three divisions, applying a number to each of them. For instance, your coverage could be $25,000 for property damage, $50,000 for bodily injury per person and $100,000 for bodily injury per accident. With single-limit, these numbers are pooled.

    The advantage of single-limit liability coverage is that in the event of an accident, the coverage does not end when one limit is met. For example, if you are to blame in an accident that injures two people to the amount of $50,000 for one person and $75,000 for the other, the bodily injury coverage per person meets one but leaves you with a $25,000 bill to make up for the other. This is just one example–it could be much worse. With single-limit, on the other hand, all the payments are pulled from one source, so as long as total injury liability does not exceed your limit, you are covered.

    Single-limit liability insurance is typically more expensive than split-limit insurance because there is not a limit that the insurance company has set on a particular type of damage. It is more cost effective for an insurance company to split liability coverage because their own liability ends at a very definite point. Thus, split-limit insurance is one way to save money on car insurance.

    Additionally, if you are to blame in an accident and carry single-limit liability insurance, the injured party’s attorney may press for a higher amount in a settlement because there is no limit (with the exception of the total coverage limit) to bodily injury coverage. Even if the medical bills came to $25,000, it is much more tempting and easier to claim double that amount.

    When you are in the market for car insurance, make sure you fully understand the differences between single-limit liability and split-limit liability insurance. Single-limit has its advantages over split-limit in that you are less likely to be stuck with a huge bill if you are at fault in an accident than you are with split-limit coverage. However, single-limit liability coverage is more expensive than split-limit, so if you are on a budget and can only afford the bare minimum coverage, single-limit might not be a feasible option.

    Finding the Best Rates

    Single-limit liability insurance is more expensive to purchase, yet it is a safer bet. With split-limit insurance you are risking personal liability, especially if you carry only minimum coverage, because damages could easily exceed your limit. To find the best rates for single-limit insurance, contact your insurer first. If you have a good driving record and credit score, you may be eligible for a discounted rate. Drivers age 55 and older are also able to get low rates due to the low risk associated with them. In addition, contact the competition. If your insurance is up for renewal and you want to switch to single-limit coverage, consider going elsewhere if another company can get you a better deal.

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    In terms of accidents among drivers with single-limit liability, statistics do not indicate a difference from those with split-limit. However, driving with single-limit coverage is a safer option that puts your personal finances in less jeopardy.