Amount of Insurance
Definition - What does Amount of Insurance mean?
The amount of insurance is the amount of money that an insurance company is willing to provide financial coverage for, for a specific policy. For example, if your homeowner's insurance policy has a limit of $300,000, then the amount of insurance you have for this policy would be $300,000. You are responsible for losses over this limit.
Insuranceopedia explains Amount of Insurance
Insurance policies that have a higher amount of insurance generally tend to cost more. However, these policies also tend to provide more coverage for their policyholders than the cheaper alternatives. How much insurance a person needs depends on their individual circumstances. Many people, for instance, will purchase the state minimum amount of auto insurance. However, those who drive a lot, or who believe they are more prone to accidents, may choose an auto policy with a higher amount of insurance.
CLUE Yourself In: How Your Claims History Informs Your Insurance Future