Insurance

Coverage Limits

A coverage limit is the maximum amount an insurer will pay for specified coverage under a policy.

4 min

Insurance 101 • 05

Insurance coverage usually has a maximum.

That maximum is called a coverage limit.

Different parts of one policy can have different limits.

A home policy, for example, may treat the building, personal property and liability as separate coverage areas.

Limits can apply to

01The whole policy02A type of property03A type of claim04Liability coverage05Additional living expenses06Specific valuables

Deductible and limit sit on different sides of the claim.

01

Deductible

The portion you pay first.

02

Coverage limit

The maximum the insurer may pay.

A loss can be larger than the coverage available.

Covered loss$150,000
Coverage limit$100,000
Maximum before other terms$100,000
Uncovered amountCould remain with you

A policy limit that was adequate years ago may not stay adequate forever.

Replacement costs, income needs and property values can change.

Review limits when

01Your home or belongings change02Your income or family needs change03You buy expensive property04The policy renews05Major costs rise over time

Remember this

Coverage is not infinite.

Know the maximum before assuming insurance will make you whole after a large loss.

Lesson complete

Reviewed 2026-08-18

Sources

Financial Consumer Agency of CanadaHome insurance ↗Financial Consumer Agency of CanadaHow insurance works ↗
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