Your coverage limit is the maximum amount your insurance company will pay for a covered claim or loss. Think of it as the ceiling on your protection—anything above that limit comes out of your pocket.

Different types of coverage within the same policy can have different limits. For example, your homeowner's policy might have a $300,000 limit for dwelling coverage but only $10,000 for personal property. Understanding your limits helps you determine if you have adequate protection. If your home is worth $400,000 but you only have $300,000 in coverage, you'll face a $100,000 gap if disaster strikes. Reviewing limits regularly ensures your coverage keeps pace with your actual needs.