Understanding Combined Single Limit Insurance

Combined single limit (CSL) insurance is a type of liability insurance policy that provides a single coverage limit for claims involving bodily injury, property damage, or both. Rather than having separate limits for bodily injury and property damage like split limit policies, CSL combines these coverages under one shared limit. This simple but important difference gives CSL policies greater flexibility in paying claims, but also results in higher premium costs. Below we’ll explore exactly what CSL is, how it works, its advantages and disadvantages, and how to decide if it’s right for your needs.

What is Combined Single Limit Insurance?

A combined single limit insurance policy provides a single maximum dollar amount that can be used to pay claims involving both bodily injury and property damage. For example, a CSL policy with a $500,000 limit could pay:

• Up to $500,000 for bodily injury claims
• Up to $500,000 for property damage claims
• Any combination of bodily injury and property damage claims adding up to $500,000

So if an accident resulted in $100,000 in property damage and $400,000 in bodily injury claims, the CSL policy would cover the full amount of both claims up to its $500,000 limit.

The “combined” aspect refers to combining coverage for bodily injury and property damage under one limit, as opposed to setting separate limits for each type of claim. The “single” aspect refers to having just one maximum claim payout limit, as opposed to stacked or split limits that have different caps for different types of claims.

CSL policies are most commonly used for auto insurance liability coverage. However, they can also apply to other types of liability policies like general liability insurance for businesses. The key is that the policy provides coverage for both bodily injury and property damage claims.

How Does Combined Single Limit Insurance Work?

Combined single limit insurance policies work by providing a shared pool of money that can be used to pay any combination of bodily injury and property damage claims up to the policy’s maximum limit. Some key things to know:

• The single limit is the most the insurer will pay for any one accident or claim.
• There are no caps on specific types of claims like bodily injury or property damage.
• The insurer can distribute the limit how they see fit to cover any eligible claims.
• Once the limit is reached, the policyholder is responsible for any remaining claim costs.

For example, say a CSL policy has a $300,000 limit and the insured driver causes an accident resulting in:

• $50,000 in property damage
• $250,000 in bodily injury claims

The insurer can pay the full $50,000 for property damage, and $250,000 for bodily injury, exhausting the $300,000 limit. Without a CSL policy, caps on specific claim types could prevent full reimbursement.

The shared single limit provides flexibility to concentrate the coverage where it’s needed most per claim. This advantage comes at the cost of higher premiums compared to split limit policies.

Combined Single Limit vs Split Limit Insurance

Split limit liability insurance, as the name implies, splits coverage limits across different types of claims. A common example is a split limit policy with:

• $100,000 bodily injury per person
• $300,000 bodily injury per accident
• $50,000 property damage per accident

Unlike combined single policies, each claim type has its own dedicated limit under a split limit policy. So in the above example:

• Bodily injury claims are capped at $100,000 per person, $300,000 per accident
• Property damage claims are capped at $50,000 per accident

There are no shared limits – each claim type has fixed protection.

Going back to our earlier example of the $50,000 property damage claim and the $250,000 bodily injury claim, here’s how it would be handled under each policy:

Combined Single Limit Policy

• Limit: $300,000
• Property Damage Paid: $50,000
• Bodily Injury Paid: $250,000
• Total Paid: $300,000

Split Limit Policy

• Bodily Injury per person limit: $100,000
• Bodily Injury per accident limit: $300,000
• Property Damage limit: $50,000
• Property Damage Paid: $50,000
• Bodily Injury Paid: $100,000
• Total Paid: $150,000

While the accident resulted in $300,000 in damages, the per-claim caps under the split limit policy only allowed it to reimburse $150,000. The combined single limit provided superior coverage due to its flexibility.

Both types of policies have their pros and cons depending on your needs and budget.

Advantages of Combined Single Limit Insurance

More Flexible Coverage. With a shared single limit, you have greater flexibility in how the policy pays claims. There are no caps specific to bodily injury or property damage claims. The insurer can fully reimburse whatever combination of damages occur up to the overall limit.

High Limits. CSL policies make it easier to have higher liability limits. With split limits, increasing per-claim caps can become prohibitively expensive. A CSL policy allows high total coverage without exceeding budget.

Simpler Policy. With only a single liability limit, CSL policies are simpler to understand compared to split policies with stacked caps per claim type. You just need to know your maximum claim payout amount.

Asset Protection. The flexible high limits of CSL insurance better accommodate policyholders with significant assets at risk in a major lawsuit. The policy can pay out whatever it takes to cover a claim up to its limit, protecting assets.

Disadvantages of Combined Single Limit Insurance

Higher Premiums. The increased coverage flexibility and simplicity of CSL policies comes with higher premium costs. Insurers charge more due to the open-ended claim exposure under the shared limit.

Limited Per Claim Types. While CSL allows great flexibility in what it pays per accident, it does not allow setting different limits per specific claim type. Limits can’t be tailored if desired.

Slower Claims Settlement. Because CSL policies draw from a shared pool for claim reimbursement, insurers often don’t settle individual injury or damage claims until all are submitted. This allows them to properly allocate the coverage limit. It can result in slower settlements compared to per-claim limits.

Overinsurance Risk. The simplicity of a single large liability limit makes it easier to overinsure with CSL policies. Large unused limits result in unnecessarily high premiums. Carefully evaluate your likely claim exposures.

Who Benefits Most from Combined Single Limit Insurance?

Combined single limit insurance offers excellent coverage flexibility, but at increased cost. It works best for policyholders who:

• Have substantial assets at risk they want to protect
• Want peace of mind with higher liability limits
• Don’t require per-claim type limits tailored to unique exposures
• Have budgets to afford the higher premiums
• Are willing to wait out potentially slower claim settlements

Examples include:

• High net worth individuals
• Directors & officers of large companies
• Motorists in regions with high claim payouts
• Businesses in liability-heavy industries

For many insureds, more affordable split limit policies with targeted claim caps provide sufficient coverage. But CSL policies offer an advantage for risk profiles requiring and able to pay for more open-ended liability coverage.

Finding the Right Combined Single Limit for You

If you decide a combined single limit policy is right for your needs, choose a limit adequate for likely worst-case losses, but not excessive. Common CSL limit ranges include:

Personal Auto Insurance

• $250,000 to $500,000

Commercial Auto Insurance

• $1,000,000 to $2,000,000

General Liability Insurance

• $1,000,000 to $3,000,000

Higher limits are available but come with progressively higher premiums. Consult your insurer to determine appropriate CSL limits based on your assets, industry, claim history, and risk tolerance.

Complementing CSL Coverage with Umbrella Insurance

Even with a high CSL limit, accidents with multiple severe injuries or extensive property damage can still exceed coverage.

Umbrella insurance provides additional liability coverage that kicks in when underlying auto or general liability policies are exhausted. Typical umbrella policy limits range from $1 million to $5 million or more.

Carrying an umbrella policy along with CSL insurance ensures you’re covered for unexpected catastrophic loss scenarios. The combination provides maximum flexibility to settle claims while limiting premium costs.

The Benefits of Customizing Coverage with an Independent Agent

The choice between combined single and split limit insurance involves weighing coverage flexibility against cost. An independent insurance agent can help you analyze claim likelihood, recommend appropriate limits and structures, and provide quotes on both types of policies.

Independent agents have access to quotes from multiple competing insurers. This allows them to shop for a competitively priced policy with an optimal liability limit structure customized for your risk profile. They serve as your advocate, not the insurer’s.

Key Takeaways

• Combined single limit (CSL) insurance provides a single shared limit for bodily injury and property damage claims.