What does a split-limits basis provide in an insurance policy?

A split-limits basis in an insurance policy specifies distinct coverage limits for different types of claims, particularly bodily injury and property damage. This structure is commonly utilized in auto insurance policies.

In this format, there are typically three specified limits: one that applies to bodily injury per person, another for bodily injury per accident (which encompasses the total for all individuals involved in an accident), and a third for property damage. This arrangement allows for more precise and tailored coverage, ensuring that an insurer can allocate resources appropriately depending on the nature and severity of the claims.

For instance, if a policy has limits of $50,000 per person for bodily injury, $150,000 total for bodily injury per accident, and $30,000 for property damage, an individual injured in an accident can receive up to the per person limit, while the total paid out for all bodily injuries in that accident cannot exceed the aggregate limit. This kind of structure is preferable in many scenarios as it provides a clearer delineation of coverage and can help prevent disputes regarding the allocation of limits among different claimants and types of damages.