Full definition
A coverage limit is the cap on what your insurance company will pay for a single claim or over the policy period. For example, if you have $100,000 in bodily injury liability coverage and cause an accident with $150,000 in medical bills, your insurer pays $100,000 and you are personally responsible for the remaining $50,000.
Real-world example
You have $100,000/$300,000 liability limits. Your insurer pays up to $100,000 per person injured and $300,000 total per accident.
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The maximum amount your insurer will pay for a covered claim.
Related terms
- Liability insurance
Coverage that pays for damage or injuries you cause to others.
- Umbrella insurance
Extra liability coverage that kicks in when your home or auto policy limits are exceeded.