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Tuesday, July 7, 2009
What Are Car Insurance Split Liability Limits?
We all know that car insurance is essential in today's society. Not only is liability insurance required by most states, but it is simply common sense to protect yourself in case you cause an automobile accident.
However, many drivers assume that their standard policy is enough to cover them in most situations. When you consider that a serious accident can result in significant medical cost (not to mention lost wages and pain and suffering), you realize that a typical liability insurance policy that covers, say, $100,000 in damages is not enough.
Not only that, but you need to be aware of any restrictions and limitations that are part of your insurance coverage. In particular, some policies have what are called split liability limits. In other words, the amount the insurance is willing to pay will differ depending on the circumstances of the accident.
Usually, you choose a limit for any injuries you cause to a single person. You then have another liability limit for any injuries you cause to multiple people in a single accident. Lastly, your policy will have a limit for the damage you cause to property in a single accident.
As you can tell, this can be pretty confusing when you have different amounts for different situations. More importantly, you may believe that you are adequately covered, but depending on the specific situation you may not have enough insurance to pay for damages.
For example, let's say your insurance policy has a total liability limit of $300,000. This is the maximum amount the insurance company will pay for any damage you cause in an accident, including property damage and physical harm to the driver of the vehicle. However, this particular policy has a limit of $50,000 per person.
Let's say you cause an accident in which two passengers are seriously injured. Let's also assume that their medical bills come to $100,000 each. The total cost is $200,000, so you might think that you are covered because your total limit is $300,000. However, remember that the limit per person is only $50,000, so the insurance company will only pay a total of $100,000. It would be your responsibility to pay the rest.
As you can see, split liability limits have their dangers, and you should be careful to completely understand your policy in case you ever need it. Odds are you will be involved in some sort of accident at some point during your driving career. You need to be prepared in case the worst happens, even though you should take precautions to avoid accidents. You may want to avoid split liability policies altogether.
However, many drivers assume that their standard policy is enough to cover them in most situations. When you consider that a serious accident can result in significant medical cost (not to mention lost wages and pain and suffering), you realize that a typical liability insurance policy that covers, say, $100,000 in damages is not enough.
Not only that, but you need to be aware of any restrictions and limitations that are part of your insurance coverage. In particular, some policies have what are called split liability limits. In other words, the amount the insurance is willing to pay will differ depending on the circumstances of the accident.
Usually, you choose a limit for any injuries you cause to a single person. You then have another liability limit for any injuries you cause to multiple people in a single accident. Lastly, your policy will have a limit for the damage you cause to property in a single accident.
As you can tell, this can be pretty confusing when you have different amounts for different situations. More importantly, you may believe that you are adequately covered, but depending on the specific situation you may not have enough insurance to pay for damages.
For example, let's say your insurance policy has a total liability limit of $300,000. This is the maximum amount the insurance company will pay for any damage you cause in an accident, including property damage and physical harm to the driver of the vehicle. However, this particular policy has a limit of $50,000 per person.
Let's say you cause an accident in which two passengers are seriously injured. Let's also assume that their medical bills come to $100,000 each. The total cost is $200,000, so you might think that you are covered because your total limit is $300,000. However, remember that the limit per person is only $50,000, so the insurance company will only pay a total of $100,000. It would be your responsibility to pay the rest.
As you can see, split liability limits have their dangers, and you should be careful to completely understand your policy in case you ever need it. Odds are you will be involved in some sort of accident at some point during your driving career. You need to be prepared in case the worst happens, even though you should take precautions to avoid accidents. You may want to avoid split liability policies altogether.
# posted by gopi @ 6:26 AM 
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