What Does Policy Maximum Mean?
A policy maximum is the maximum amount that the insurance policy will pay for covered services or expenses. This amount differs for every plan, and it may be an annual limit, per term period, per incident like injury or illness, or it could be a lifetime maximum.
It may also be known as a policy limit, maximum limit, or maximum coverage.
Insuranceopedia Explains Policy Maximum
The policy maximum suitable for each policyholder depends on the type of insurance and their specific circumstances. An insurer is not liable to pay more than the maximum over the specified time period. Therefore, whenever a policyholder makes claims, the amounts rewarded go toward that limit. Once they reach the limit, the insurer no longer has to pay out any benefits. For instance, a travel insurance policy has a policy maximum of $50,000, but the policyholder has covered expenses of $60,000. The insurer would not be liable to pay more than $50,000.