Rhode Island Insurance Adjuster Exam

What distinguishes a single limit policy from a split limit policy?

1. Single limit is per person, split limit is total

2. Single limit includes property damage, split limit does not

3. Single limit is one lump sum for all liabilities, split limit is divided by person and accident

4. Single limit has higher premiums than split limit

The correct answer is: Single limit is one lump sum for all liabilities, split limit is divided by person and accident

A single limit policy is characterized by providing a single, unified coverage amount for all types of liability claims, which means that this single limit can apply to bodily injury and property damage incidents. In contrast, a split limit policy specifies separate monetary amounts for different types of liability, typically dividing the coverage into amounts per person injured, total amounts for bodily injury per accident, and total amounts for property damage. This distinction is crucial for understanding how much coverage is available in different scenarios. In a split limit policy, the payouts are capped per individual and can vary based on the specifics of the accident, while a single limit allows for more flexibility in addressing claims, as all damages are covered under one cap. This flexibility can be particularly beneficial in situations where multiple claims may arise from a single incident, as the insured can allocate the funds as needed up to the single limit. The other aspects of the options, such as the premium levels or coverage types, do not strictly define the key difference between these two policy types as effectively as the division of limits does.