What is established by single limits in insurance policies?

Single limits in insurance policies refer to the maximum payout that an insurer will cover for liability damages, which encompasses both bodily injury and property damage in a single amount. This feature simplifies coverage by allowing a single limit for all claims related to liability, rather than dividing the coverage into separate amounts for different types of damages. This means that if a claim is made that involves both bodily injury and property damage, the total payout from the insurer will not exceed the established single limit, regardless of how the damages are allocated between these types of claims.

The other options do not accurately represent the function of single limits. For example, stating that it pertains only to property damage or only to bodily injury misrepresents the inclusive aspect of single limit coverage, which addresses overall liability rather than isolating damages into different categories. Similarly, while maximum payouts for liability damages are included, the concept of single limits specifically emphasizes the combination of payouts for various liabilities rather than being restricted to one specific type.