Your insurance coverage limits are the maximum amounts your insurance company will pay if a covered loss or claim is made under your policy. These limits can vary depending on the type of insurance you have – like auto or home – but they are generally expressed in two amounts: the per occurrence limit and the aggregate limit.
Per Occurrence Limit: The maximum paid for a single claim. This payout is calculated after you meet your deductible.
Aggregate Limit: The maximum amount of money your insurance company will pay to cover all your claims in a given time period.
Coverage Limits for Homeowners Insurance
On your homeowners insurance policy, you will likely be required to have enough dwelling coverage to cover your loan amount in the case of a covered event. Some insurers will set dwelling coverage limits based on the replacement cost of your home, which is determined by its age, size, and other features.
Coverage Limits for Auto Insurance
In the U.S., each state sets minimum limits for liability coverage on an auto insurance policy. There may be several coverage limits on your auto policy, depending on the event.
- The limit your insurer will pay for bodily injuries per person.
- The limit your insurer will pay for bodily injuries per accident.
- The limit your insurer will pay for property damages per accident to another party’s vehicle or property.
Understanding your coverage limit is essential for ensuring you have sufficient financial protection in the case of a covered loss or peril.
