What is Auto Insurance Splits Limit Policy?
A common car insurance coverage is the split liability. It is used for personal coverage. A split limit liability is the method used in determining the liability coverage of maximum amount that can be paid. In this approach, there are advantages and disadvantages that should be considered before purchasing car insurance.
A split limit liability is the type of liability insurance that most of us are familiar with. This policy has three coverage limits. One for bodily injury for a single person, another for bodily injury caused to a group of people and the last is for payouts to damages whether for a personal property or another individual’s property. For example, an insurance policy may state that the liability is 40/80/30. This represents the split liability. There are states that require liability coverage setting a specific amount as the minimum limit.
Here’s an example of a payout for a single person and multiple persons. For example, the coverage is 40/80/30; the first amount represents $40,000; this is the maximum payout to a single person. The second amount represents $80,000; this is the maximum payout to a group of people. The third amount is for paying off damages that might have happened to a personal property or another person’s property.
An advantage of having a traditional split limit coverage is it is less expensive that other policies. If you are looking to save on auto insurance, then this is the insurance you are looking for. Another benefit is the method of payouts. In split limit coverage, the amount for payout may be limited; therefore claimants will be discouraged to ask for more payment. In split liability coverage, the maximum limit is lower.
The disadvantages of having a split limit liability are ample. Today, due to the economic crisis, traditional policy limits are not enough to cover all expenses. Example, car values are often higher than $50,000, and that will be used for property damage only. If multiple cars are involved, then the allotted $50,000 is not enough. In addition, medical treatment costs are higher than ever, and it’s possible that split limit liability coverage is not enough in the event of a major accident.
When the limits are exhausted, the assets of a business or home might be at risk if ever a claimant files for personal injury lawsuit. A homeowner may decide to add an umbrella policy, but this will be an additional expense that they acquire whenever they renew their policy.
To ensure that the splits limit liability coverage will work for you, make sure that your coverage limits are high enough. This simply means setting an adequate limit per person, per group accident, and sufficient property damage coverage.
Property damage coverage can be critical, especially when you consider your split limits coverage. An accident may occur in which you damaged another driver’s car, and you need to make sure that your policy can cover costs that can amount to thousands or even millions of dollars. Damaging a car can cost a lot, damaging multiple cars may mean a big financial problem for you.