Policy Limits

Policy limits refer to the maximum amount an insurance company will pay for a covered claim. For example, if your auto insurance policy has a $100,000 limit for bodily injury, the insurer will cover up to that amount for injuries you cause to others. If damages exceed the policy limit, you are responsible for paying the difference. Policy limits are set when you purchase insurance and can vary by type of coverage, helping manage risk for both the insurer and the insured.