What does the term "split limits" refer to in liability coverage?

The term "split limits" in liability coverage refers to the separate maximum payouts assigned for different types of injuries and damages. This means that insurance policies with split limits specify distinct amounts for bodily injury per person, bodily injury per accident, and property damage. For example, a policy might have limits of $25,000 for bodily injury per person, $50,000 for bodily injury per accident, and $10,000 for property damage. This structure allows for more tailored coverage, as it distinguishes between the types of claims that might arise from an accident.

Other options do not fit this definition; for instance, a combined single amount for all claims would indicate a different type of coverage known as "combined single limits," which consolidates all types of claims into one overarching limit. A limit that changes based on the claims filed does not align with how split limits function, since split limits are predefined and do not adapt according to the nature of the claims. Lastly, a single limit for all property damage claims would suggest a coverage structure that does not differentiate between bodily injury and property damage, which is not consistent with the concept of split limits.