Policy Limit
What Does Policy Limit Mean?
A policy limit refers to the maximum monetary amount that an insurance company will pay for a specific claim under an insurance policy. It represents the highest amount the insurer is responsible for. For example, if a car insurance policy has a policy limit of $1 million, the insurance company will pay up to $1 million if you make a claim.
Insuranceopedia Explains Policy Limit
Insurance policy limits are established through a contract at the time the insurance policy is created. Policies typically specify either an individual limit (the maximum amount payable for a single claim) or an aggregate limit (the highest amount that can be paid for all claims within a policy year). For example, a policy with an individual limit of $1 million and an aggregate limit of $4 million would cover up to $1 million for each claim, with a total payout limit of $4 million for all claims during the policy term.
