Monday, 5 March 2012

Pros and Cons of Single Limit Liability Car Insurance

Photo Credit: CubaGallery
Single Limit Liability is a type of Insurance under Car Liability that has one fixed amount for coverage. This is contrary to Split Limit Insurance wherein there is a pre- set amount for 3 areas: Bodily Injury per Person/Bodily Injury per Accident/ Property Damage. In this article, we will discuss more about the Pros and Cons of Single Limit Liability or Combined Single Liability Insurance for your car.

Single Limit Liability is really a plus for car owners. It combines all amounts for your totaled expenses incurred in an accident. Imagine if the damage you have done will cost so much, your single limit liability insurance will take care of the bulk of amount. Unlike split liability, you will have a limit for each injury, so you will have to pay for the excess bills.

To cite an example, if you have accidentally bumped your car into someone crossing the road, you will be obliged to pay for injuries and possibly legal suits. Will your split limit liability insurance pay for all these? Since there is a limit, you will probably be insured for a couple of hundred thousand dollars. Say for instance $300,000 for bodily injury. That’s all it will pay for. The rest of the amount, you will be forced to shoulder. If you have single limit liability, you will be able to be covered for a higher amount for all damages combined, thus, reducing the risk of selling your properties and being bankrupt in the process. Single limit liability will save your assets and your reputation as well!
A piece of advice, it is also very wise to get a Car Umbrella Insurance. This will cost a little more, say 400-500 dollars in a year. But its policy limit will range from a million to 5 million dollars! It will also extend coverage to your own home, and other valuable assets and not only for your car. So you will be at peace thinking that your house and car are insured. This, on top of your Single limit liability will extend your limit to a million or so. Going back to the case of the injured pedestrian, what if he will incur close to a million dollars in damages and legal fees? This is a reality that we often dismiss easily. In the process, we lose our homes and our dignity, which could have easily been avoided for an umbrella insurance of just 500 dollars a year!

Disadvantages of Single limit are few. The first one is obviously the cost. It costs higher than Split Liability simply because it has a higher coverage. If you are in a very tight budget, this is not the policy for you. But then again, if for instance, you are on a tight budget and you meet an accident wherein multiple vehicles are involved and you are at fault, your split liability will definitely not suffice. In hindsight, wouldn’t single liability have been the best choice?

Another disadvantage is that processing of claims may be delayed because all the damages will be charged to one amount of coverage, and in the event that many vehicles are involved and many people are injured, they have to submit all claims to the insurance agency and this will take time. Overall, it is still the best choice to have Single Limit Liability Insurance for your car.