Split Limits

Overview

Split Limits is a liability limit structure used primarily in auto insurance that divides coverage into three separate caps rather than providing a single combined amount. Each cap restricts the maximum payout for a specific type of damage, which can create coverage gaps when claims are concentrated in one category. While split limits are standard in personal auto insurance, they are less favored in commercial contexts where Combined Single Limit (CSL) policies are preferred.

How It Works

A split limit policy is expressed as three numbers, typically written in the format: per-person BI / per-accident BI / per-accident PD.

For example, a policy with limits of $250,000 / $500,000 / $100,000 means:

• $250,000: Maximum bodily injury payment for any single person injured in one accident.
• $500,000: Maximum total bodily injury payment for all persons injured in one accident.
• $100,000: Maximum property damage payment per accident.

These three limits operate independently. If a single accident causes $400,000 in bodily injury to one person, the policy pays only $250,000 (the per-person cap), even though the per-accident limit is $500,000. Similarly, if property damage reaches $300,000, the policy pays only $100,000.

The per-person bodily injury limit is often the most restrictive cap. In serious accidents involving a single victim, this sublimit can leave significant damages uncovered. The property damage sublimit is also frequently inadequate in commercial settings where vehicles may collide with buildings, inventory, or expensive infrastructure.

Split limits provide less flexibility than CSL because the funds cannot flow between categories. With a $1,000,000 CSL, the entire amount is available for any combination of damages. With split limits totaling a similar value on paper, actual coverage depends on how damages are distributed.

Compliance Relevance

Split limits require careful analysis during COI compliance review:

• Contractual preference for CSL: Most commercial contracts specify a CSL requirement (e.g., "$1,000,000 Combined Single Limit"). If a vendor submits a certificate showing split limits instead, the compliance team must determine whether the split limits satisfy the requirement.
• Equivalence assessment: There is no standard conversion formula. A $1,000,000 CSL is generally considered superior to split limits totaling $1,000,000 or more because CSL provides greater flexibility.
• Certificate identification: On the ACORD 25, split limits appear in separate fields under Automobile Liability, rather than in the CSL field. If the CSL field is blank but the split limit fields are populated, the policy uses split limits.
• Minimum sublimit evaluation: The weakest sublimit (usually property damage) should be evaluated against likely exposures. A $100,000 PD limit is inadequate if the vendor operates near expensive property.

Example

A landscaping vendor carries auto insurance with split limits of $300,000/$500,000/$100,000. Their contract with a property manager requires $1,000,000 CSL. Even though the per-accident bodily injury limit is $500,000 and the total of all three limits suggests $900,000 in coverage, the policy falls short of the $1,000,000 CSL requirement. The compliance team issues a deficiency notice requesting the vendor obtain a $1,000,000 CSL policy or higher split limits.