coverage limits

Coverage limits refer to the maximum amount an insurance policy will pay for a claim. Think of it as a financial cap on the insurer's responsibility. For example, if you have car insurance with a $100,000 coverage limit and you incur $150,000 in damages, the insurance will only pay up to $100,000. The remaining amount is your responsibility. Coverage limits are essential because they help determine the extent of financial protection provided and can vary by policy type, impacting premiums and the level of risk you assume.