Glossary
Policy limit
The most an insurer will pay for a covered loss under a coverage, stated per person, per accident or per vehicle on your declarations page.
Also called: coverage limit, limit of liability, insurance limits
A policy limit is the maximum the insurer will pay for a covered claim. Every coverage on an auto policy has one, shown on your declarations page. Anything above the limit is not the insurer's responsibility; for a liability claim, it becomes yours.
Limits are written in different ways. Liability is usually split: 50/100/50 means $50,000 per person for bodily injury, $100,000 per accident for bodily injury, and $50,000 per accident for property damage. Some policies use a combined single limit instead. Collision and comprehensive usually pay up to the car's actual cash value, minus your deductible, and optional coverages carry their own caps, such as a daily and total limit for rental reimbursement.
Example: you cause a crash that injures one person, whose damages total $80,000. With a $50,000 per-person limit, your insurer pays $50,000 and the injured person can pursue you for the other $30,000 (hypothetical figures). Limits generally apply per accident or claim rather than per year, and in a standard auto policy the insurer's defense costs are paid in addition to the liability limit. See liability limits and the liability limits decoder.
Last reviewed October 4, 2026