Question 34

This policy has a split limit.

A liability policy with a bodily injury limit of $50,000 and a property damage limit of $25,000 is classified as having a split limit. This means that the policy specifies separate limits for different types of coverage within the same policy.

A) Aggregate

An aggregate limit refers to a maximum amount that an insurer will pay for all claims during a specified period, typically a policy year. Since the policy specifies distinct limits for bodily injury and property damage rather than a single total limit for all claims, it does not qualify as an aggregate limit.

B) Split

This option is correct because a split limit divides coverage into separate amounts for different types of losses, such as bodily injury and property damage. In this policy, the distinct limits of $50,000 for bodily injury and $25,000 for property damage exemplify a split limit.

C) Single

A single limit provides one overall amount of coverage for all types of damages combined, rather than having separate amounts for different types of claims. Since this policy delineates separate limits for bodily injury and property damage, it cannot be considered a single limit.

D) Occurrence

An occurrence limit pertains to the maximum amount payable per incident or event, regardless of the number of claims. While this policy does have limits for specific types of claims, the key feature being tested here is the division of limits, which distinguishes it from an occurrence limit.

Conclusion

The policy's designation as having a split limit is confirmed by the presence of separate coverage amounts for bodily injury and property damage. Each alternative option fails to match this structure, further solidifying that the correct answer is indeed B, as it accurately reflects the policy's configuration.