Los Angeles Claims Adjuster Property and Causality Practice Exam

In personal automobile policies, what type of limits are predominantly used for bodily injury liability claims?

1. Flat limit

2. Aggregate limit

3. Split limits

4. Single limit

The correct answer is: Split limits

In personal automobile policies, bodily injury liability claims typically employ split limits. This option refers to insurance coverage where there are two distinct amounts specified for bodily injury liability claims. These amounts may be represented as separate limits for each person injured in an accident and for the total amount per accident, thereby allowing for differentiated coverage based on the specific circumstances of a claim. The first part of the split limit usually designates the maximum amount the insurer will pay for injuries to a single individual, while the second part indicates the aggregate maximum amount available for all injured parties in a single incident. This structure is beneficial to policyholders, as it allows for more precise financial protection tailored to varying injury scenarios. This contrasts with flat limits, which provide a single, fixed amount for all claims, and aggregate limits, which cap total payouts across all claims within a policy period. Single limits, while they offer one total amount for all bodily injury and property damage claims combined, do not provide the same level of detail and protection for distinct bodily injury incidents as the split limits do. Thus, split limits are predominant in personal automobile policies, providing policyholders with clarity and a structured approach to liability coverage.