Limit
The most your policy will pay for a covered loss. Everything above the limit is on you.
A limit is a ceiling. It marks the point where an insurer's obligation stops and the rest of the bill turns into the policyholder's problem. Limits are the numbers that decide what a policy is worth in a bad year, and they sit in plain view on the declarations page.
Policies do not carry one limit — they carry a limit per coverage. An auto policy has separate ceilings for bodily injury and property damage, written either as split limits like 100/300/50 or as one pool under a combined single limit. A home policy has separate limits for the structure, other structures, personal property and loss of use.
Underneath those headline numbers sit sublimits — smaller caps on particular categories. Home and renters forms commonly cap theft of jewelry, watches and furs at a low figure, with separate caps on firearms, silverware, cash and business property. The overall personal property limit can be $80,000 while the jewelry theft cap is $1,500. Raising the big number does not lift the small one; that generally takes scheduling the item.
Limits also come in flavors. A per occurrence limit resets for each separate event. An aggregate limit, more common on umbrella and liability coverage, caps the total across an entire policy period no matter how many events happen. The deductible and the limit work at opposite ends of the same claim — one trims the bottom, the other caps the top.
Liability limits are the ones with no natural stopping point, since the size of a lawsuit is not tied to the value of anything owned. An umbrella policy exists to extend those ceilings above what the underlying auto and home policies carry.
In real life
A renters policy carries $40,000 of personal property coverage. A burglar takes a $1,300 laptop, a $900 television and an engagement ring appraised at $6,200. The laptop and television are paid normally. The ring runs into the policy's $1,500 sublimit on jewelry theft, so that is what the claim pays for it — even though more than $36,000 of the overall limit sits untouched.
Common questions
What is a sublimit on a home insurance policy?
A sublimit is a smaller cap sitting inside a larger coverage. Personal property coverage might total $80,000 while jewelry theft is capped at $1,500 and cash at $200. For those categories the smaller cap controls, not the headline number. Listing an item individually, which insurers call scheduling, is the usual way such caps get raised.
What happens if a claim is more than my policy limit?
The insurer pays up to the limit and stops. On a first-party loss, the remaining repair or replacement cost sits with the policyholder. On a liability claim, the unpaid balance stays the policyholder's legal responsibility and can be pursued in court. An umbrella policy is the coverage designed to sit above those underlying limits.
Does raising my coverage limit raise my premium?
Generally yes, though usually not in a straight line. Higher liability limits often cost less per added dollar than the first layer does, since very large claims are rarer than small ones. The actual change depends on the insurer's filed rates, the state, and which coverage is raised, so the same increase prices differently from company to company.
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Definitions describe how these terms are generally used across the U.S. market. Wording, limits and exclusions vary by insurer, policy form and state — the policy you hold is what controls. See the full Insurance Glossary.