April 21, 2010

Understanding A Combined Single Limit On An Auto Insurance Quote

Auto insurance requirements vary by state, but there are several basic elements that all auto insurance quotes must include. The most important of these is liability insurance. Liability often forms the bulk of the amount of auto insurance premiums paid by individuals, and it is also one of the most essential parts of any auto insurance policy. This coverage is used to pay the costs if an insured strikes another object or person and causes damage or injury. Every state mandates a minimum of required liability, but the amounts vary greatly. Liability coverage typically takes two forms – split coverage and combined single limit.

The more common type of liability payout structure is split coverage. The coverage is split into two types – bodily injury (BI) and property damage (PD). BI limits cover any and all injury suffered by another party in the accident. This can include at the scene and ongoing medical expenses. Property damage coverage takes care of any damage to another person’s car or any other property damaged, such as a light standard or road sign. In states that operate under a split limit structure, it is typically written out as three numbers – for example 25/50/25 in Oklahoma. This means that the auto insurance provider will pay out $25,000 for one person’s injuries in a crash, not more than $50,000 in total for everyone involved, and not more than $25,000 for property damage. In some states, the minimums are much higher, resulting in higher premiums, and in some states they are far lower, meaning more risk for the consumer to have to pay out of pocket.

On the other hand, there are states that use a combined single limit, which is simply an amalgamation of the PD and BI coverage into one number. $75,000 worth of combined single coverage will pay out for any property damage or injury sustained in an accident. This means that if substantial injuries occurred, but minimal damage, up to 100% of the coverage could be used to help pay for treatments and hospital bills. In the same way, a collision with significant property damage but no injuries could be fully paid for by this kind of coverage. Combined single limit can be of benefit to customers, as it allows for a greater flexibility in coverage when it is most needed.

From an auto insurance quote standpoint, these two types of coverage will look the same. An auto insurance agent will be able to advise clients of exactly how their coverage will be distributed, and what kind of effect that will have on their auto insurance premiums. While both have their merits, combined single limit makes reaching the cap for either type of damage less likely.