Liability Limits

What Does Liability Limits Mean?

Liability limits refer to the maximum amount a liability insurance company would pay for a single claim. For any claim above that amount, the policyholder would have to cover it out of pocket or rely on other liability insurance, such as an umbrella policy.

Insuranceopedia Explains Liability Limits

For example, a policyholder accidentally runs into a car in front of them. Their combined single limit of $100,000 in their auto insurance policy would cover any injury to the other driver and damage to the car, as long as it amounts to less than $100,000.

Businesses, especially larger corporations, would likely need a lot more coverage due to the increased risks of running a business and having multiple employees. Liability insurance can be extremely important because accidents or damage caused by defective products could potentially have huge financial ramifications for the company.