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Split versus Single Limit Liability Insurance

In nearly every state across the country, there are legal provisions mandating auto insurance coverage for every driver. The basic foundation of any auto insurance policy is liability coverage. It is also the legal cornerstone of auto insurance laws nationwide, with every state but one requiring this form of coverage for every vehicle out on the road. Liability auto insurance covers the insured party from personal financial responsibility in the event of an accident for which the insured is deemed liable. There are two types of basic auto liability insurance, split-limit and single limit. There are similarities and differences between the two, and a proper understanding of both can help consumers better understand their choices when it comes to auto liability coverage.

Basics of Split-Limit Insurance

Split limit automobile insurance grants the covered policy holder protection from personal financial liability in three specific areas in the aftermath of a car accident. A split-limit policy is divided into three parts with three individual coverage limits. These limits are not overlapping, and the coverage earmarked for a certain area of coverage can only be used for expenses related to that area of coverage. The three parts of a split-form auto liability policy are single victim bodily injury liability, single accident bodily injury liability, and property damage liability. All three of these areas have their own financial levels of coverage, with minimums set by the individual states in which they are sold.

Single victim bodily injury liability protection is set aside for payment of medical bills incurred by the first victim of an accident for which the insured party is at fault. Like any auto liability policy coverage, this portion does not grant the insured individual any kind of coverage for their own expenses. Additional areas beyond auto liability are needed for the insured party to have any kind of coverage at all protecting them from costs of car accidents like medical care and auto repairs. The split-form style of liability coverage cuts bodily injury coverage in half to effectively reduce the amount of money a single claimant could receive in the event of an accident with just one victim aside from the negligent driver.

Single accident auto liability bodily injury protection is earmarked for payment toward any and all costs of medical care and other expenses directly related to injuries suffered by all parties victimized by the guilty insured driver. In other words, if there were two passengers as well as a driver involved in the accident in the other car, all their medical bills would be paid for out of this portion of coverage.

The limit of these payments, as with all forms of liability coverage, is based on the preset limits of coverage elected by the insured policy holder at the outset of the coverage period. This is certainly something to bear in mind when you set down the specifics of your auto liability policy. Any and all costs t go above and beyond the limits of your coverage will become your personal responsibility, and victims can go after you in court to recover damages, even if it means going after your assets. These are important facts to ponder when you make liability coverage choices.

The third and final portion of a split-limit auto liability policy is the one dealing with loss to personal property. Once again, this coverage does not protect your car or other property that may be damaged in an accident. It only protects you from having to pay for damages you cause to others' property in the event of an at-fault accident. Just like the other two areas of coverage dealing with bodily injury costs, the financial limits of coverage set aside for personal property liability are expressly designated for use in covering only those costs. There is no crossing over of coverage or using leftover monies from one area to pay for another.

Single Limit Liability Coverage

In fact, just that very fact is perceived by some as a major flaw in split-limit auto liability insurance. If you are paying for a certain monetary level of protection, they say, you ought to be able to use it to meet whatever costs you might face in a liability situation. And thus we come to single limit liability auto coverage.

Single limit liability coverage is similar to split-limit coverage in that it covers costs incurred in the areas of bodily injury and personal property damage. But it differs from split-limit policies in that the terms of coverage only provide one single monetary chunk of coverage, to be used as needed and distributed among medical costs and vehicle repair bills and the like. It has just one pool of liability coverage to draw from in the event of an accident for which the covered driver is at fault.

Comparing the Two Liability Types

There are certainly advantages to the single limit form of auto liability insurance in comparison with split-limit auto coverage. One example is in the flexibility of use of funds. The entire pool of available coverage can be spread out in any combination necessary to meet the overall financial costs of dealing with the after effects of a car accident. When you are found liable for an accident and you have this kind of flexibility, it can really work to your advantage, particularly in situations where one area of expense figures much more prominently into the overall cost than the others.

For example, if you hit someone and the damage to their vehicle is not all that severe, but their medical expenses are high due to their injuries like neck or brain injuries requiring complicated surgeries, it pays to have single limit coverage, because all the extra money you have left over in your policy will be available to pay for these charges, and none of it will go to waste. A single limit policy is a truer policy to judge in terms of its coverage, because all the money is always available in every accident situation.

However, not every accident works out that way, and you certainly would not need to use every dollar of coverage in every situation. In fact, insurers often point out that state minimum split-form liability insurance requirements are often enough to handle all the costs of a typical car accident. Split limit auto liability insurance policies are less expensive than single limit policies with the same overall available financial coverage.

Split limit policies are more likely to leave you facing higher out of pocket costs if you do have an at-fault accident resulting in serious injuries and property damage, but they will cost you less in the way of your policy premium. So if you have both options, you need to decide based on risk. If you are willing to take on more risk for yourself in the name of saving more money up front, choosing a split form policy is appropriate. However, if you want your coverage to be as inclusive as possible and are willing to pay more money to make that happen, single limit auto liability coverage might be a better choice for you. Each individual driver must decide based on monetary needs and coverage goals.


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