Market & Policy · Insurance Term
Limit of Insurance (Policy Limit)
Definition
The limit of insurance is the most a policy will pay for a covered loss or claim. It is shown on the declarations page and may apply per occurrence, per building, per location or in total for the policy period.
In Plain English
Every policy sets maximums. A property policy might show a building limit, a contents limit and a business income limit for each location. A liability policy usually shows a per occurrence limit and an aggregate limit, which is the most it will pay for all claims during the policy period.
Within the main limit, some coverages have a smaller cap called a sublimit. Flood, mold, water damage and ordinance or law are common examples. A loss in those areas can be capped well below your main limit.
The limit is separate from the deductible, which is the part you pay first. All of these numbers appear on the declarations page and its schedules, so that is the first place to check.
Not sure how your policy handles this? Have us review it, or get a quote.
Example
Hypothetical: a warehouse has a $3,000,000 building limit, a $100,000 sublimit for mold and a $50,000 deductible. A $200,000 mold claim would be capped at $100,000, before the deductible and any other terms.
What to Watch For
- Check each building and location limit on the declarations page and schedule.
- List every sublimit and ask whether any is too low for your property.
- Know whether liability limits are per occurrence, aggregate or both.
- Confirm that limits meet your lease and lender requirements.
Common Questions
Is my limit the amount I'll be paid after a loss?
No. The limit is a maximum. The payment depends on the actual covered loss, the deductible, any sublimits, coinsurance and your policy's other terms.
How do I know if my limits are high enough?
For property, compare limits to current rebuilding costs. For liability, consider your exposure, your contracts and lender requirements, and whether you carry an umbrella.
Last updated October 14, 2026 · Primesure editorial team · How We Write