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Liability Limits

Last updated: September 17, 2016

What Does Liability Limits Mean?

Liability limits refer to the maximum amount a liability insurance company would pay for a single claim. For any claim above that amount, the policyholder would have to cover it out of pocket or rely on other liability insurance, such as an umbrella policy.

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Insuranceopedia Explains Liability Limits

For example, a policyholder accidentally runs into a car in front of them. Their combined single limit of $100,000 in their auto insurance policy would cover any injury to the other driver and damage to the car, as long as it amounts to less than $100,000.

Businesses, especially larger corporations, would likely need a lot more coverage due to the increased risks of running a business and having multiple employees. Liability insurance can be extremely important because accidents or damage caused by defective products could potentially have huge financial ramifications for the company.

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