Combined Single Limits

What Are Combined Single Limits?

Combined single limits are a provision of an insurance policy that limits the coverage for all components of a claim to a single dollar amount. A combined single limit policy has a maximum dollar amount that covers any combination of injuries or property damage in an incident. A combined single limit can also be used to cover claims for more than one person in an incident.

For example, the policy might state that the insurer will pay up to "x" dollars for a single claim; regardless of whether all of the components of the claim are 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. Combined single limit policies are helpful because they allow insurance companies to apply the maximum amount of coverage to where it's needed.

How Combined Single Limits Work

Combined single limit policies–also called single limit policies–are frequently used with automobile insurance. The combined single limit means there's a maximum amount of money that's paid out, which covers all aspects of damage such as bodily injury and property damage. However, the limit would cover all people involved in the accident or the claim, meaning the maximum amount of coverage would be split between those involved.

Combined Single Limit vs. Split Limit

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.

A split limit policy coverage breaks up the payout into three areas of coverage:

For example, a policy with a combined single limit might state that it will pay a maximum of $300,000 per incident. On the other hand, a policy with split limits might pay $100,000 per person per incident for bodily injury, with a maximum payout of $300,000 per incident. If one person seeks $250,000 in damages for their injuries, the combined single limit policy will cover the entire amount of $250,000. However, the maximum payout under the split limit policy would be $100,000. The only way the split limit policy would pay $300,000 is if three different people each had $100,000 in claims.

Combined single limit policies have high premiums and can be helpful for those with a lot of assets. However, those with few assets might not benefit enough to justify the high premiums.

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 leaves off. Regardless of which type of limit your insurance policy uses, an umbrella policy can be 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.

Advantages of a Combined Single Limit

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.