South Carolina Personal Lines Practice Exam

How is a combined single limit defined?

1. A limit for property damage only

2. A limit for bodily injury only

3. A single dollar limit for total damages

4. A limit that varies by claim type

The correct answer is: A single dollar limit for total damages

A combined single limit is defined as a single dollar limit that applies to total damages in a liability policy, covering both bodily injury and property damage claims. This means that, rather than having separate limits for each type of claim, the insurer provides one overall cap on the total amount they will pay for a single incident, regardless of whether the damages are for bodily injury or property damage. This approach simplifies the claims handling process because it allows for greater flexibility in how the coverage is allocated between different types of claims. For instance, if a policy has a combined single limit of $300,000, and there are both bodily injuries and property damage resulting from an accident, the insured can utilize the full amount available to satisfy either claim, as long as the total does not exceed that limit. This can be particularly beneficial in situations where one type of claim may significantly exceed the other. In contrast, options that specify limits for property damage only or for bodily injury only do not reflect the nature of combined single limits. Additionally, the idea of a limit that varies by claim type does not correspond with the standard definition of a combined single limit, which maintains a fixed threshold for all damages covered under that limit.