What Are Combined Single Limits?
Combined single limits refer to a provision of an insurance policy that limits the coverage for all components of a claim (bodily injury per person, bodily injury per accident, and property damage) to a singledollar amount.
That is, a combined single limit liability policy has a maximum dollar amount that covers any combination of injuries or property damage in an incident. A combined single limit can also be used to cover bodily injury claims for more than one person in an incident.
For example, the policy might state that the insurer will pay up to "x" dollars for a single claim. This applies whether the claim relates to one person’s injuries, whether there are three injured parties, or whether there is property damage in addition to bodily injury. The combined single limit maxes out at the stated dollar amount no matter the claim categories.
Combined single limit policies are helpful because they allow insurance companies to apply the maximum amount of coverage where it's needed.
Key Takeaways
- Combined single limits are a provision of an insurance policy that limits the coverage for all components of a claim to a singledollar amount.
- A combined single limit policy has a maximum dollar amount that covers any combination of injuries or property damage in an incident.
- Combined single limit policies tend to have higher premiums than split limit policies because they offer broader coverage.
How Combined Single Limits Work
Combined single limit liability policies–also called single limit policies–are frequently used in automobile insurance. The combined single limit refers to a maximum amount of money that's paid out for claims that involve all aspects of bodily injury and property damage. The limit would cover all people involved in the accident or the claim (other than the insured). The maximum amount of coverage would be split between those injured.
Combined Single Limit vs. Split Limit
The opposite of a combined single limit is a split limit, which states different maximum dollar amounts that the insurer will pay for different components of a claim.
A split limit policy coverage breaks up the payout into three areas of coverage:
- Bodily injury per person
- Bodily injury per incident
- Property damage
For example, a policy with a combined single limit might pay a maximum of $300,000 per incident. On the other hand, a policy with split limits might pay $100,000 per person per incident for bodily injury, with a maximum payout of $300,000 per incident.
If one person seeks $250,000 in damages for their injuries, the combined single limit policy will cover the entire amount of $250,000. However, the maximum payout under the split limit policy would be $100,000. The only way the split limit policy would pay $300,000 is if three different people each had $100,000 in claims.
Since they offer broader financial coverage, combined single limit policies tend to have higher premiums. Another way to obtain broader coverage than a split limit policy offers is to purchase a personal liability umbrella policy. This type of policy picks up where your automobile and homeowners insurance leaves off.
Regardless of which type of limit your insurance policy uses, an umbrella policy can ensure that you’re fully covered if you’re held liable for a very expensive accident. For example, if you have a combined single limit policy or a split limit policy that maxes out at $300,000, but you’re being sued for $1 million, your umbrella policy could provide the additional financial protection you'd need.
Combined single limit policies can benefit those with a lot of assets to protect. However, for those with few assets, such policies might not be worth the cost.
Advantages and Disadvantages of Combined Single Limits
Advantages
Combinedsingle limit policieshave several distinct advantages. They can eliminate the need for additional coverage because the single, dedicated amount for accident claims enables an insurance carrier to divide it as needed.
Plus, people with significant assets, such as a home can feel confident that the financial protection they need will be available in a single limit policy because there is no limit on what's payable per claim component.
For example, if an accident results in a large amount of property damage but very little bodily injury, the bulk of the coverage can be focused on the property damage claim.
Disadvantages
One big disadvantage of combined single limit coverage is that the premiums generally are more expensive than for a split limit policy due to the greater, more flexible coverage.
Another is that claims resolutions can take longer. That's because, when there's a single amount of money that payouts are drawn from, insurance companies will often need all parties to submit their claims before settling any single one.
What Does Combined Single Limits Mean in Insurance?
It refers to liability coverage that has a single coverage amount that will be applied as needed to bodily injuries and property damage.
What Is the Difference Between Combined Single Limits and Split Limits?
Where a combined single limit policy has one coverage amount for the distinct liability categories of bodily injury and property damage, a split limit policy has set amounts for each category.
Is a Combined Single Limit Policy Better?
That depends. The flexibility of applying a single coverage amount as it's needed is a great benefit. Coverage in a split limit policy is firmly set per bodily injury and damage categories. But a combined single limit policy is more expensive than a split limit policy. So you'd have to decide if its advantages are worth the added cost.
The Bottom Line
A combined single limit insurance policy is one where the the coverage is a single dollar amount that covers both bodily injury and property damage claims as needed. It's different from a split limit insurance policy, which sets a specific dollar limit for each component.
Combined single limit coverage is more expensive than split limit coverage due to the broader financial protection it affords buyers. This added cost can be justified for those with significant assets to safeguard in case of lawsuits.
