Combined Single Limit Liability

Some insurers allow you to choose a “combined single limit liability” (CSL) rather than split limits, though CSL liability coverage is more typical for commercial automobile insurance.   If you choose high enough limits, you should be okay with either split limits or CSL.  However, it’s important to understand the distinction between the two.

As discussed in another article, split liability limits are broken down into three parts. (1) each person, (2) each occurrence, and (3) property damage.  CSL, on the other hand, provides one total limit of liability for all aspects of an accident.  There is no individual liability limit per person, per occurrence, or for property damage limit.

Please note, if you have a $300,000 CSL, and injure 3 people, your insurer will not pay $900,000 total.  $300,000 is the maximum money paid out for any bodily injury and property damage you cause per accident.  If a court awards $500,000 to all injured parties in an accident you are found liable for, you would be personally responsible for the additional $200,000.

Let’s look at the results of the same accident with the different types of coverage.

Example: Jose crashes his car into another vehicle while driving home from work.  Jose is found to be at fault.  The other vehicle sustains $20,000 in damage.  The driver of the other vehicle is awarded $36,000 in bodily injury damages.  In addition, another occupant in the vehicle is awarded $107,000 in bodily injury damages and pain and suffering.

Split Liability Limit Outcome: Let’s assume Jose has 50/100/25 limits of liability.  His insurer would pay the following amounts; the driver of the other vehicle would receive the full $36,000 in damages, as it is below the $50,000 per person limit on his policy.  The insurer would pay the occupant of the other vehicle $50,000, which is the per person limit of liability for Jose’s policy.  This would leave Jose responsible for the additional $57,000 in damages for the other occupant.  Finally, the insurer would pay the full $20,000 to repair the other vehicle, as it falls within the $25,000 property damage limit of liability.

Combined Single Limit Liability Outcome: Let’s assume Jose has a $100,000 combined single limit insurance policy.  In this instance, Jose’s insurer would pay $100,000 total for all property and bodily injury damages for the accident.  Since the liability limit is not high enough to cover all of the damages, the courts would stipulate how the money is divided (which is done on a case by case basis).  Jose would be personally responsible for paying the remaining $63,000 in damages.

In this particular example, Jose would benefit slightly by having split limit insurance.  However, this is not always the case.  Had Jose purchased a CSL policy with a $250,000 limit, he would have not been personally responsible for paying any of the damages resulting from this accident.  Remember, in the split limit outcome of this example, Jose was still responsible for $57,000 in damages for the occupant of the other vehicle.  This is just another example of why you should purchase as much coverage as you can afford.

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This post was written by The Truth Team on October 7, 2008 Comments (0)