What Is Policy Limit?
A policy limit is the maximum amount an insurance policy will pay for a covered claim. Any cost above the limit is yours to pay, so choose limits carefully. Limits can apply per occurrence, per coverage, or as an aggregate over the policy term.
Most policies carry several limits. A liability limit caps what the insurer pays for injury or damage you cause to others, usually written per occurrence with an aggregate limit for the whole policy term. Property coverages have their own limits for the building, contents, and add-ons, and some kinds of property, such as jewellery or cash, carry smaller internal limits.
A limit is not the same as a deductible: the deductible is what you pay first, and the limit is the most the insurer pays. If a lawsuit or loss could exceed your limits, an umbrella policy adds another layer of liability protection. As an independent brokerage, Roughley reviews your limits against your assets and any contract, lender, or landlord requirements.
Frequently asked questions
What does policy limit mean in insurance?
A policy limit is the most your insurer will pay for a covered claim under a coverage. Your limits are shown on your policy declarations, and different coverages on the same policy usually carry different limits.
What happens if a claim is more than my policy limit?
You are personally responsible for any amount above your limit. On a liability claim that can put your savings, home, or business assets at risk, which is why higher limits or an umbrella policy are worth considering.
How do I choose the right policy limit?
Choose a limit based on what you could lose, not on the lowest premium. Consider your assets, the cost to rebuild or replace your property, and any limits a contract, lender, or landlord requires; your broker can compare the cost of higher limits across several insurers.
Questions about Policy Limit?
Our Ontario brokers can explain how it applies to your policy.
Talk to a Roughley broker