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insurance companies can express their liability coverage using either a combined limit or split limits. if a split limit is used, such as $100,000/$300,000/$100,000, then the second term in the limit expresses the maximum dollar amount that the insurance company will pay for

User MisterNox
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Final answer:

Split limits on insurance coverage determine the maximum amount an insurance company will pay for different types of claims.

Step-by-step explanation:

Insurance companies can express their liability coverage using either a combined limit or split limits. If a split limit is used, such as $100,000/$300,000/$100,000, then the second term in the limit expresses the maximum dollar amount that the insurance company will pay for bodily injury per person.

Split limits typically include three numbers, which represent the maximum coverage for bodily injury per person, bodily injury per accident, and property damage per accident, respectively. In the given example, the insurance company will pay a maximum of $300,000 for bodily injury per accident and $100,000 for property damage per accident.

User Swbradshaw
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Final answer:

The second term in a split liability coverage limit indicates the total coverage available for injuries to all people in a single accident. Premiums are set based on risk groups, and cost-sharing measures discourage overuse of insurance benefits.

Step-by-step explanation:

If a split limit is used, such as $100,000/$300,000/$100,000, then the second term in the limit expresses the maximum dollar amount that the insurance company will pay for all injuries sustained by all people in a single accident. In contrast, the first term indicates the maximum coverage for injuries to one person in an accident, and the third term represents the maximum payment for property damage per accident.


Insurance companies assign premiums based on risk groups, charging lower premiums to lower-risk individuals, which can prevent those with low damages from subsidizing those with higher damages. Cost-sharing mechanisms like deductibles, copayments, and coinsurance are also implemented to reduce moral hazard, ensuring that policyholders share a portion of the costs to prevent overuse of insurance coverage.

User Ben Davison
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