I’m a honk for combined single limit

January 23, 2013

Auto insurance isn’t really complicated, but I admit our industry could always do a better job simplifying it for people. That’s where I come in.

  POSTAGE  by Rob Stamp

I make it a point to go over the coverages and deductibles with customers who are purchasing a new policy. For many folks, some of whom have been driving for decades upon decades, it’s the first time a lot of it gets explained to them.

Whenever possible, I try to steer clients to a combined single limit for liability coverage. Instead of separate limits for bodily injury and property damage, there is one total limit for both. And, it also removes the per-person sublimit for injuries we see on most people’s policies.

A common combination for liability coverage is $100,000 per person, $300,000 per accident for bodily injury, and $100,000 per accident for property damage. What that means is the most the insurance company pays for one person’s injuries would be $100,000. It’s not out of the realm of possibility these days that someone injured in a car accident receives care and treatment that ultimately runs up medical bills that exceed that amount. A serious accident you were held responsible for could easily exhaust those bodily injury limits. And, when the insurance company stops paying, you’re on the hook for the rest. It’s kind of like, “Thanks for playing. We’re outta here.”

Sometimes that separate property damage amount offers more than enough for the other cars or whatever else you’re responsible for wrecking. I’ve always felt that the combined single limit is simply better because you have a total pool of money that can be used wherever it’s needed, injuries or property damage.

Think of it as having one big bag of money from which to pay a claim as opposed to three smaller ones that may not take care of it all.

There are a lot of insurance companies out there which do not offer the combined single limit. That in itself tells me that perhaps it’s a better deal for the consumer than it is for the company, which would be another good reason to insist upon it.

Though some insurers offer a $100,000 combined single limit, I’m quick to point out how insufficient that is today. I’d suggest $300,000 or $500,000 and you’d probably be surprised that it doesn’t cost a whole lot more for what I’m convinced is a lot better protection.

Split limits? No thank you. I’ll take the combined single limit, please. And you can save the apprehension for someone else.