Maximum Coverage

Definition - What does Maximum Coverage mean?

Maximum coverage is the most coverage an insurance company will provide during a specific period. If a policyholder needs coverage beyond this amount, then they would have to pay out-of-pocket or use an alternative form of insurance. Maximum coverage details are laid out in insurance policies so policyholders can fully understand how much coverage they have.

Maximum coverage is also known as a maximum limit or a policy maximum.

Insuranceopedia explains Maximum Coverage

Maximum coverage is used in many different types of insurance. Oftentimes, if an insurance buyer is looking to have a higher maximum coverage, then they would have to purchase a policy with higher premiums.

The reason why many insurance policies have maximum coverage amounts is because if claims run too high, then the insurance company can suffer underwriting losses. Such losses can threaten the future of the business. Depending on the premiums and the individual policy, there may be a cap on the amount that an insurance company is willing to pay out.

If an individual needs more than the maximum coverage, then they can purchase another policy or simply look for a policy with a greater maximum coverage.

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