Let’s have a quick overview about liability coverage. In auto insurance, having liability coverage is important. It can help you pay for other’s expenses in an accident that you caused. You can check “Car Liability Coverage” to learn more about this coverage.
There are two types of liability coverage. The split limit and the combined single limit. In the previous article we already have a “simple explanation on split limit coverage”. Now, we are going to tackle the other type which is the combined single limits.
This type is a little bit different from the other type. The insurer just simply lump all of the things together. The overall limit is the amount the insurer is willing to pay out “per accident”. It can also be used to cover claims for more than one person in an accident.
Basically, this limit is your total payout for both property damage and bodily injury. In a combined single limit, a common limit is $300,000. Choosing a limit should depend on your needs.
Combined Single Limit Examples:
Imagine this, if we have a single limit of $80,000. It means that the insurer will payout no more than $80,000 in total to people who are hurt from bodily injury or if their property is damaged. Add all the costs together and your insurance will pay out no more than $80,000.
Let’s create a scenario wherein you cause an accident that has the following damages:
- Ronnie – $40,000
- Johny – $8,000
- Johny’s Car – $4,000
You hurt Ronnie, and it results in $40,000 bodily injury. Johny on the other hand, total’s his bodily injury to $8,000. Lastly, you also did $4,000 damage to Johny’s car. Take note your single limit for this scenario is $60,000.
Now, what we need to do is to lump everything together. Ronnie’s $40,000 bodily injury + Johny’s $8,000 injury + Johny’s $4,000 in car damages. We add all these together and see if it’s less than $60,000.
40,000 + 8,000 + 4,000 = 52,000
Let’s compare the total damages to our combined single limit. Our single limit for this example is $60,000. It’s the cap, wherein it is the most that the insurance will pay out “per accident”. We have $52,000 in total damages that we caused. So, the insurance under the combined single limits of $60,000 will end up paying $52,000 in damages. There’s no problem nor shortage since 52,000 is less than 60,000 which is our cap.
Let’s have another scenario, to fully understand the combined single limits.
Say that you involved yourself in an accident. And you caused these following damages:
Jeyz has a total of $60,000 in bodily injury. On the other hand Ronnie has a total of $14,000 in bodily injury. Lastly, a total of $18,000 in property damage that you caused.
So, let’s say you have a combined single limit of $100,000. In this situation, all we need to do is add all of those damages you caused in order to see if the total amount is covered. In this scenario, you add $60,000 of Jeyz. The $14,000 of Ronnie and the $18,000 of the total property damage. The sum of all the damages is $92,000. So, in this situation everything would be covered. It’s because 92,000 is under the 100,000 limit.