A provision in an insurance policy that limits the amount of loss that the policy covers regardless of the extent of the damage is known as a:
A)security deposit.
B)coverage ceiling.
C)policy limit.
D)deductible.
E)loss premium.

Question

Quizplus · Accepted Answer

A policy limit is a maximum amount of money that an insurance policy will pay out under covered losses. Even if the actual loss is greater than the policy limit, the insurer will not pay more than the policy limit. This is done to manage the insurer's risks and set clear expectations on the part of the policyholder.

A Provision in an Insurance Policy That Limits the Amount