Options, options and more options. Car insurance coverage can be confusing. Especially when there is a little bit of the unknown involved, which is certainly the case with car insurance and accidents. You simply never know how or when your time will come and how “bad” it will be.
One of the more confusing concepts relating to car insurance liability coverage is the difference between combined single limit liability and split limit liability.
To ease your mind for this read, we’ll point out that choosing one or the other is simply a preference and that purchasing high enough liability limits, whether “single” or “split” is the best way to ensure you don’t end up in a bad financial situation as a result of a car accident you cause.
What is Combined Single Limit Liability?
Some insurers allow you to choose a “combined single limit liability” (CSL) rather than split limits, though “CSL” liability coverage, as it’s known, is more commonly purchased for commercial automobile insurance.
As discussed in the split liability limits post, auto insurance liability is broken down into three parts. (1) body injury for each person, (2) body injury for each occurrence, and (3) property damage.
Combined single limit liability, on the other hand, provides one total limit of liability for all three “parts” discussed above. There is no individual liability limit per person, per occurrence, or for property damage limit.
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 each accident. If a court awards $500,000 to all injured parties in an accident for which you are found liable, you would be personally responsible for the additional $200,000 in damages.
Believing you can only be sued for the amount of your car insurance coverage is a common insurance myth.
So What’s the Real Difference?
The only way to get a grasp on the different outcomes that may result from an accident is to look at the results of the same accident with the different types of coverage.
You will quickly see that neither is a clear winner, as every accident is unique and our crystal ball is no more accurate than yours.
This is why your best bet is to purchase the highest liability limits your insurer offers and maybe even purchase a personal liability umbrella policy on top of that!
Example: Jose crashes his car into another vehicle while driving home from work. Jose is found to be at fault for the accident and his insurance will be responsible for paying bodily injury and property damages the other party suffered.
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 bodily injury 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, which amount to $163,000 in total, 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.
We have very little control over what happens when we are operating a motor vehicle. Even the safest drivers in the world can cause accidents in which multiple people are hurt and expensive property damage occurs.
Whether you have a combined single limit of liability or split limits, you can see from the example above, you should be purchasing as much coverage as you can afford.
Shopping your insurance rates online is a good way to see if you can afford higher coverage limits than what you currently have.
Read more: How are car insurance rates determined?