Definition - What does Limitations mean?

Limitations are the maximum amount of money that an insurance company will pay out for a claim in a policy period. These amounts are typically specified on the insurance policy.

If losses exceed the limitations for a policy period and the policyholder has no additional insurance, then they themselves will be responsible for the excess losses.

Insuranceopedia explains Limitations

Limitations are put in place because it would not be feasible for insurance companies to pay out an infinite amount of money for all of the losses their policyholders experience. Instead, most policies have a specified limitation that is calculated to prevent the insurance company from overextending itself.

People who fear that they may experience losses above the limitation of their policy often buy additional insurance to provide backup coverage.

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