South Carolina Personal Lines Practice Exam

What type of limits of liability has limits separately stated for different coverages?

1. Aggregate limits

2. Split limits

3. Combined single limits

4. Maximum limits

The correct answer is: Split limits

The correct answer is split limits. In an insurance context, split limits refer to the type of liability coverage that specifies separate limits for different types of coverage, typically for bodily injury and property damage. For instance, a split limit might have a specified amount for bodily injury coverage per person, another amount for total bodily injury per accident, and a separate amount for property damage. This allows policyholders to clearly understand the maximum coverage available for each category of liability they may face. In contrast, aggregate limits refer to the maximum amount an insurer will pay for all claims during a policy period but do not break those amounts down by type of coverage. Combined single limits represent a single dollar amount for total coverage, which does not differentiate between the different categories of liability. Maximum limits is a more general term that does not specifically describe a structure of limits by coverage type. Understanding these distinctions helps policyholders select the right type of coverage for their needs and understand the limits that apply to their policies.