Limit of Insurance: It is the Maximum amount of money insurance companies will pay against your claim. It is the most important aspect when choosing your Insurance. If you exceed the insurance limit you will be responsible for paying those expenses.
Let’s Understand this with the Help of the Example –
Example: If Your Policy has a $5,000 limit of Coverage for your vehicle. If any damage is caused to your vehicle, the insurance company will pay up to $5,000 against your claim. If your expenses exceed this limit, you will have to pay for those expenses.
Limit of Liability: It is the highest amount the insurer will pay against your loss or if you cause damage to someone else’s Property.
For each coverage include in your policy, Indicate a certain limit of Liability that the insurer will pay for a covered claim.
Let’s understand it with your example-
Example: let’s understand this with Automobile Policy Coverage
- Single Limit Liability
- Bodily Injury liability
- Property Damage Liability
- Medical Payments
- Uninsured Motorist
- Underinsured Motorist
- Comprehensive
- Collision
- ACV unless the Amount stated
- Towing and Labour
- Trans Exp/Rental Re
Let’s say you have accident liability coverage of $500,000. This Limit will include both Bodily and Property damage per accident for any or all claims. This limit Will cover everyone involved in the accident. If expenses are more than this limit then you will be responsible to pay for extra expenses.