Sublimits

What Does Sublimits Mean?

Sublimits are additional limitations within an insurance policy that apply to specific types of losses. They are part of the overall coverage limit and do not provide extra coverage. Instead, they set a maximum amount for certain losses. Sublimits can be expressed either as a specific dollar amount or as a percentage of the total coverage available.

Insuranceopedia Explains Sublimits

For example, in a $500,000 business liability policy that covers lawsuits, there might be a 10% sub-limit for punitive damages. This means that only $50,000 of the coverage can be used to pay for punitive damages. Similarly, a homeowners policy might specify that, out of its $500,000 coverage, only $100,000 is available for flood-related losses and $50,000 for earthquake-related losses. The insured cannot receive an insurance payout exceeding the sub-limit for each specified type of loss.