What is a statutory limit in an insurance policy?

A statutory limit in an insurance policy is the maximum amount of money that an insurance company will pay out to cover a loss. This limit is set by law and is required to be listed in the insurance policy. In California, most insurance policies must have a statutory limit written in the policy. The limit that must be placed in a policy differs depending on the type of insurance being issued. For example, homeowner’s policies usually have a maximum of $300,000 written in the policy, while auto policies usually have a maximum of $15,000. Insurance companies also have the right to set a higher statutory limit than what is required by the state. This can be beneficial if the person purchasing the insurance policy needs more coverage than what is required by the state. No matter what the statutory limit is, the insurance company will still not be required to pay above the amount stated in the insurance policy. If an insured person has any losses that exceed the limit stated in the policy, the person will be responsible for the remaining cost of the losses. It is important for people to review the statutory limit that is listed in their insurance policy so they know the limit of coverage they have.

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