Even among experienced insurance agents I find confusion reigns on the definition and application of the two types of commonly sold Liability Limits. I see agents warning buyers to Beware of Split Limits, as if we might need to wash our hands after purchase.
In fact, this is not true. Split limits or CSL (combined single limits) are both legitimate choices, depending on the situation. This depends on what the actual amounts of the limits are, and not just how they are applied in any particular loss.
For example Combined Single Limits i.e. CSL Limits of $50,000 or $100,000 apply to either Bodily Injury OR Property Damage. In other words, the maximum the insurance company will pay for covered damages that have been deemed to have been caused by you, (your fault) is $50,000 or $100,000.
The loss can be all Bodily Injury or all Property Damage or any combination of the two, but the maximum amount covered is $50,000 or $100,000 depending on the amount of coverage you decide to purchase.
If you have split limits, such as $100,000 worth of coverage for bodily injury (BI) per person / $300,000 BI coverage per accident, and $100,000 worth of coverage for property damage (PD), this means that the insurance company is required to pay up to $300,000 in BI (depending on the number of persons injured), as well as up to $100,000 worth of PD claims.
Hypothetically speaking, which would you rather to have, a $50,000 CSL policy or a Split Limits policy of $50,000 BI per person and $50,000 per accident and $50,000 for property damage? I will give you my personal choice at the bottom.
TIP: If you totaled someone else's brand new vehicle, how much would you be responsible for? We highly recommend that you carry a minimum limit of $50,000 for Property Damage alone.
In this example I choose B because I have up to $50,000 in BI coverage AND up to $50,000 in PD coverage. This also ensures that you have total coverage of $100,000 instead of $50,000, which gives you more protection.
If you are unsure or confused about any of this, be sure to contact your personal legal advisor or financial professional. The information and example I have provided above is simply meant to be used for common education purposes only.
Linden Gray is an international insurance veteran with 29 years of retail & direct insurance experience. Mr. Gray has been featured in numerous publications including RV Magazine, PE.com, Google, Yahoo, Digg & Buzzle. Visit his website here;
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