What is a policy limit?
A policy limit is the maximum amount of money an insurance company will pay out for a claim. The policy limit is determined by the terms and conditions of the policy. In Florida, the policy limit is usually agreed upon by the insured and the insurance company before a policy is purchased. A policy limit can be based on the type of coverage, the amount of coverage, and the duration of coverage. For example, an insurer might limit the amount of coverage for property damage, medical expenses, legal costs, and other damages to a certain amount. That amount is the policy limit. If a claim exceeds the policy limit, the insurance company will not pay out any additional amount. Therefore, it’s important for policyholders to read the policy and understand the limits. In Florida, policyholders are able to purchase additional coverage or increase the policy limits if they feel they need more coverage. In addition to policy limits, there are also deductibles. A deductible is an amount of money policyholders must pay before the insurance company will pay out on the claim. In Florida, policyholders are able to choose the deductible amount to lower their premium payments. Although there are limits to the amount of coverage insurance companies will provide, policyholders should feel comfortable knowing that they are adequately protected in case of an accident. Understanding policy limits and deductibles can help ensure that policyholders are appropriately insured and able to recover from any financial losses.
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