We all know that (1) auto insurance is required by state law and (2) auto comp/collision coverage allows you to fix your car or truck in the event of a loss. However, what most people do not consider is the importance of the liability component to car insurance. They assume the state "minimum" requirement is enough, when in reality saving a couple dollars a month could cost a family tens of thousands of dollars in lawsuits. Remember, the primary role of insurance is to protect you from a financially devastating event so understanding your liability limits are very important.
At Ruzicka Insurance Services, we strive to save our customers money on their insurance but not at the expense of placing you and your family at risk. Fortunately, we believe we can save you money while also protecting you with the right coverage.
Split Limit Coverage The most common type of car insurance liability is referred to as "Split Limit". This insurance liability coverage is made up of 3 separate components wrapped up under the "liability coverage" heading.
When reviewing auto liability insurance coverage, you might see all 3 components lumped together, like this: 50/100/50. What's most important is understanding what each liability component protects.
Bodily injury, each person ($50,000 maximum payment per person, for example)
Bodily injury, each accident ($100,000 maximum payable per accident, for example)
Property damage ($50,000, for example)
Bodily injury liability coverage protects you if you're responsible for an accident that hurts another person or persons, covering their injuries and lost wages. Keep in mind, though, that liability car insurance is for injuries to other people - coverage doesn't apply to your own injuries.
Property damage coverage covers damage you cause to somebody else's property - things like their car or mailbox, or even their house or storefront. Again, it doesn't apply to damage caused to your own property.
What is unknown to most is the extremely low cost of moving from the Texas state minimum auto insurance limits of 30/60/25 to 100/300/100, or even higher.
Combined Single Limit (CSL) In the most simplest of terms, this type of auto insurance coverage is a combination of all the limits so that you receive the most complete liability coverage you can. There is not split differential between the three main components of personal injury, accident damage, or personal property damage. A combined single limit is exactly what the name implies; it is combined into one single limit.
Combined vs. Split When you have an accident you are going to be given the exact limit that you policy states. For example, if you have an accident and have a standard 100/300/50 split you might not be covered fully. Let's assume that your accident caused $225,000 in damages and injury. You would think that the $300,000 total accident limit would cover, but it falls short. If two people were injured with $165,000 of injuries (one at $15,000, and the other at $150,000), coupled with $60,000 in physical damages, you would still be liable for $60,000 in payments. This is because the sub-limits of $100,000 medical and $50,000 for property have been surpassed. Not all insurance companies offer CSL policies.
Combined Single Limit Supersedes Sub-Limits If you have that same accident with a combined single limit insurance policy, then you would be fully protected. This is because your total limit is $300,000. There are no differentials in what is paid out to what. The entire cost of all the injuries and damages are combined together to make one single payout. This supersedes any type of individual limits.
Different Scenarios Offer Different Results A combined single limit auto insurance coverage is the better choice for liability insurance. However, there are certain circumstances where a split limit liability policy will be better served. In the end, it comes down to how much you are willing to pay for the insurance. While the combined is a little more expensive, you might be better served to purchase that instead. In the end, you should take a look at your current insurance policy to see what type you currently have and possibly upgrade if possible.
The team at Ruzicka Insurance Services is here to help you understand and make sure that you are properly insured to meet your individual needs.