Combined Single Limits

Combined single limits are a provision of an insurance policy that limits the coverage for all components of a claim to single dollar amount. A combined single limit policy would state that the insurer will pay up to x dollars for a single claim; it doesn’t matter whether all components of the claim is related to one person’s injuries, or whether there are three injured parties represented by the claim. The combined single limit maxes out at the stated dollar amount either way.

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. Whereas a policy with a combined single limit might state that it will pay a maximum of $300,000 per incident, a policy with split limits might pay $100,000 per person per incident for bodily injury, with a maximum of $300,000 per incident. If one person seeks $250,000 in damages for their injuries, the single limit policy will cover all $250,000, but the most dollar amount that the split limit policy will pay is $100,000. The only way the split limit policy will pay $300,000 is if three different people each have $100,000 in claims.

Combined single limit policies, since they offer broader coverage, tend to have higher premiums. Another way to obtain broader coverage than what’s offered under a split limit policy is to purchase a personal liability umbrella policy, which will pick up where your automobile and homeowners insurance leave off. Regardless of which type of limit your insurance policy uses, an umbrella policy is a good idea to make sure you’re fully covered even when you’re held liable for a very expensive accident. This way, it wouldn’t matter much if you have a combined single limit policy or a split limit policy that maxes out at $300,000 and you’re being sued for $1 million.

Combined single limit policies have several distinct advantages, especially for people with significant assets like a home. For instance, in such cases where there are assets at risk, people will often carry an additional umbrella liability insurance coverage. However, a combined single limit liability coverage policy virtually eliminates the need for additional coverage because having a single "pot" for accident claims enables an insurance carrier to divide the entire limit amount as needed. For example, if an accident results in a high amount of property damage but very little bodily injury, the bulk of the claims will be dedicated to property damage claims payouts.