Advantages and Disadvantages of Single Limit Liability

March 18, 2013

Single limit liability is a newer approach to auto insurance liability coverage. This method approaches accident claim payouts from a "large pot" concept, and has both advantages and disadvantages for the policy holder.

What Is Single Limit Liability Coverage?
Single limit liability coverage is auto insurance that provides one flat amount for coverage limits. For example, a policy owner may choose total per incident liability coverage of $300,000. This amount would include any and all claims for a single accident for bodily injury and property damage. Also, the limit would be applied for everyone involved in the accident, so that everyone would share in the limit of $300,000 in our example.

Single Limit Liability vs. Split Limit Liability Coverage
While single limit liability auto insurance coverage provides one limit cap over an entire accident incident, split limit liability coverage divides the coverage limits up over 3 areas--one amount for bodily injury per person, one amount for bodily injury for the accident and one limit for property damage for the incident.

Using the example above, the single limit liability amount is $300,000 for the entire incident. However, with split liability coverage, the liability limit caps might be $100,000/$300,000/$100,000. This breaks down to $100,000 medical bodily injury coverage per person, $300,000 bodily injury coverage for the entire accident and $100,000 total property damage limits.

Advantages of Single Limit Liability Coverage
For individuals with assets such as a home or business, a single limit liability policy can have several distinct advantages. Very often, if you have assets to protect from potential law suits, you will automatically carry an additional umbrella insurance coverage, which is an added expense.

However, a single limit liability coverage policy virtually eliminates the need for an umbrella policy to protect from auto insurance law suits. This is because having a single "pot" for claims for an accident enables an insurance carrier to divide the entire limit amount as needed according to the related claims. 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 toward property damage claims payouts.

In many cases, carrying a single limit liability coverage policy will actually result in limits that are more than adequate to cover any claims that result from an accident. This is in contrast to split limit liability coverage, which very often results in a gap between actual claims and limits on the coverage. The result of this situation is very often a personal injury law suit against the policy holder in an attempt to recoup any unpaid expenses, placing home and businesses at risk.

Should you be at fault in an accident, you would not be limited by a pre-set damage amount and be left with the burden of making up the difference between what your policy covers and the balance of the claim made by the injured. Having combined single limit coverage can save you in the long run.

Disadvantages of Single Limit Liability Coverage
The primary disadvantage of single limit liability coverage is that it is more expensive than split limit coverage. For individuals with no assets to protect, and who wish to avoid higher auto insurance premiums, the benefits of a single limit liability policy will probably not outweigh the disadvantages enough to justify the higher premiums.

Another disadvantage to a single limit coverage policy is that resolution of claims may take longer, particularly in large accidents or ones that involve several different claimants. Since all of the claims are being pulled from a single limit amount, the insurance company may require that all claims be submitted before settling and closing out the case.

How to Get the Best Single Limit Liability Rates

Single limit liability may be the way to go for many people. It can be much easier to understand single limits, and can make your insurance much simpler. Here'what you need to know.

Be Clear about What You Need
Shopping for insurance rates can be difficult, since there is no such thing as a standard. Different states require different minimum amounts on liability. When you compare auto insurance quotes, you may be comparing different policies without realizing it. The best way to do this is to actually speak with someone and be clear about the quote you want. If you are looking for a $300,000 in coverage, be sure to tell the agent this is what you need. This way, you aren't getting quotes with different levels and other things added in.

Always Look for as much as You Can Afford
If you are getting quotes that are below what you can afford, consider upping the coverage slightly. It's always better to have a little more when it comes to single limit liability. This will protect you if an accident causes you to cap your insurance out. Sometimes, the best rates aren't always going to give you the best coverage.

If you have questions about how single limit works you can always speak with an insurance agent. In most cases they are perfectly willing to go over your options in detail with you. Single limit liability coverage is a good choice for many people.

Applying for Single Limit Liability Online

Applying for this type of car insurance online is a simple and easy process.

  • Gather all of your relevant information. This includes your contact information, car make and model, latest mileage reading and company finance information. You also need to provide your driver's license, social security number and driving history. You may also be asked about your employment and residence history. Finally, review your credit report, since many companies now use credit history as a factor in rate quotes.
  • Choose an online resource. There are numerous online insurance websites to utilize when researching car insurance rates for single limit policy coverage. The 2 primary types of websites are specific company websites, and insurance clearinghouse websites. Specific companies that offer auto insurance, like Progressive, Travelers and others, provide information about that company's policies and rates. Clearinghouse websites allow you to apply for insurance and then see quotes from several different companies for side-by-side comparison of rates, benefits and company rating.
  • Complete the online application. You will be asked to provide information about your driving history, the car, make and model you want coverage for and contact information. You will also be asked to provide your driver's license number and social security number.
  • Review policy quotes. In some cases, you will be given a policy quote immediately after you complete the application information online. You may also be provided this information in an email or even in a follow-up telephone call by an agent wanting to discuss several different quotes or potential policies.
  • Choose your coverage and make a payment. Very often, you can secure single limit liability car insurance coverage immediately. Once you make your first payment, you can immediately print your evidence of coverage to place in your car and present to you local DMV if needed.

Related Questions and Answers

Is Single Limit Liability Included in an Umbrella Liability Insurance Policy?

Yes, an umbrella liability insurance policy is written in consideration of a single limit of protection per incident. This single limit is the maximum combined total that will be paid out by an umbrella liability insurance policy in the event of a claim. This single limit total includes all medical expenses and property damage claims that may arise from an incident that occurs involving the named insured. Single limit policies vary from split limit policies in that specific maximums are not provided for bodily injury for an individual, bodily injury for a single accident and property damage. Instead, a single maximum number is used when considering all claims on an umbrella liability insurance policy.

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