Maximum Limit

What Does Maximum Limit Mean?

A maximum limit, in the context of insurance, refers to the total amount of money an insurance company will pay over a specified period to cover a policyholder’s claims. Once this limit is reached, the policyholder is responsible for covering the remaining costs of services or treatments. While the maximum limit typically applies to a single policy year, this is not always the case.

It may also be referred to as maximum coverage, policy limit, or policy maximum.

Insuranceopedia Explains Maximum Limit

There has been ongoing debate about whether maximum limits should apply to essential benefits, such as life-saving surgeries or treatments for deadly infections. As of 2014, health insurance companies are prohibited from imposing maximum limits on these essential benefits. However, maximum limits are still allowed for non-essential benefits. As a result, policyholders with maximum limits may need to pay out-of-pocket for certain non-essential benefits once the insurer has paid out benefits up to the policy’s maximum coverage.

Outside of health coverage, maximum limits still play a real role in how much an insurer will pay. Auto policies use the same idea, where each driver picks bodily injury and property damage caps that act as the insurer’s payout ceiling, and the article on how much liability insurance you need walks through how to choose those numbers. Annual and per-incident caps are also common in pet insurance, so it’s worth comparing payout limits when looking at the best pet insurance for older dogs, since vet bills can climb past a low maximum quickly.