In plain English
This is the payout cap written into the insurance policy. It sets the most the insurer will pay for losses the policy covers. The cap may be stated for a particular claim, person, item, or policy period, depending on the policy wording.
In context
Here, “policy limit” labels the amount that represents the highest payment the insurer will make under the policy for covered losses for the scope that entry covers.
- Situation
- Reading premium, deductible, excess, copay, limit, and out-of-pocket fields
- What it communicates
- labels an overall limit entry in the policy document
Meaning limits
The term by itself does not show whether that maximum applies to a claim, a person, an item, or a policy period in the specific policy.
Examples
“The flood damage came to $28,000, but the insurer paid only the $20,000 policy limit for that covered claim.”
“Each listed painting had a separate policy limit.”