What do split limits in an insurance policy provide?

Split limits in an insurance policy refer to a structure where different monetary limits apply for different types of coverage within the same policy. This often includes separate limits for bodily injury per person, total bodily injury per accident, and property damage. For example, a policy could specify that it covers $25,000 for bodily injury per person, $50,000 for total bodily injury per accident, and $25,000 for property damage.

This arrangement allows policyholders to manage their risk and ensure that they have adequate coverage for varying situations that may arise from accidents. By clearly defining the limits for each type of claim, split limits give a comprehensive picture of the coverage amounts that apply under specific scenarios, which brings clarity and precision to liability coverage.

In contrast, a single limit would provide one total coverage amount for all damages, which does not differentiate between types of claims. A cap on total lifetime payouts refers to an overall limit on the policy's duration or overall payout, while a minimum payout for liability would indicate a baseline amount that the policy would pay, regardless of the specifics of the claim. Neither of these concepts accurately describes the purpose and function of split limits.