What Is a Combined Single Limit?

Combined single limit is a type of automobile insurance policy which allows car-owners the ability to cover all damages incurred in an accident under one policy limit. This differs from split limit insurance, which assigns individual limits on the amount of damages covered for each person injured in an accident and the property damage caused by the accident. With a combined single limit policy, the person who is insured may be able to better cover the costs of an accident if they are weighted heavily toward one aspect. Any costs that go over the combined limit must be paid out of pocket by the policy-holder.

When a driver gets into a car accident and is considered to be at fault, he must pay the damages incurred from any injuries suffered by passengers in the other car along with the costs of repairing the other vehicle. These costs can be prohibitive and are the reason that all drivers should have an effective insurance policy. Some drivers may seek out a combined single limit policy to cover their losses in a more flexible manner than traditional split limit policies.

To understand how a combined single limit policy is effective, it is useful to imagine an example where a split limit policy would come up short. A typical split limit policy might provide coverage of 50/100/10. This means that the policy holder has limits of $50,000 US Dollars for each person injured in an accident, $100,000 USD for all persons injured in the accident, and $10,000 USD for any property damage suffered by the other vehicle.

The policy holder proceeds to cause an accident which causes $20,000 USD of damage, in terms of medical expenses, to the driver of the other car along with $60,000 USD of damage to a passenger of the car. In addition, the other car, worth $18,000, is totaled in the accident. Using the split limits, the policy-holder would have to pay the passenger $10,000 USD out of pocket to make up for the difference between the $60,000 USD and the $50,000 USD single-person limit. On top of that, the policy-holder would be liable for the $8,000 USD difference between the $18,000 USD property damage and the $10,000 USD property damage limit. That makes for a total of $18,000 that must be paid out of pocket.

By contrast, the corresponding combined single limit policy would provide $100,000 USD of coverage to cover any damages caused by the accident. The total amount of damage, adding up all of the personal and property damage, is $98,000 USD, which means that the person with the combined single limit policy of $100,000 USD would be completely covered. Such flexibility in allocating coverage to where it is most required is the most favorable feature of a combined limit policy.