What is the purpose of split limit policies in automobile insurance?

The purpose of split limit policies in automobile insurance is to specify maximums for different types of damages. This means that the policy separates liability coverage into different categories, typically covering bodily injury and property damage independently. For instance, a policy may state a certain amount is available for bodily injury per person, a separate amount for bodily injury per accident, and a third amount for property damage.

This structure allows for more precise control over the types of coverage and limits. It ensures that there is a clear understanding of how much coverage an insured party has for various claims, which can be beneficial in legal situations where damages may vary significantly between bodily injury and property damage. By specifying these limits, split limit policies help both insurers and insured parties manage expectations and responsibilities regarding potential claims.