The maximum amount an insurance company will pay for a covered loss under a policy. Limits can apply per occurrence, per person, or as an aggregate over the policy period. Choosing the right coverage limit is one of the most important decisions when buying insurance.
Related Terms
Premium
The amount you pay to an insurance company to maintain your coverage, typically billed monthly, quarterly, or annually. Premiums are determined by factors such as risk level, coverage amount, deductible, location, and claims history.
Per-Occurrence Limit
The maximum amount an insurer will pay for a single claim or event. Each separate incident is subject to this limit regardless of how many claims have already been filed during the policy period. Per-occurrence limits are distinct from aggregate limits.
Aggregate Limit
The maximum total amount an insurer will pay for all covered claims during a policy period, typically one year. Once the aggregate limit is reached, the insurer will not pay any additional claims regardless of individual per-occurrence limits remaining.