A coverage limit is the maximum amount an insurer may pay under a policy or coverage part, subject to its terms and conditions.
Definition
A coverage limit is the maximum amount an insurer may pay for covered loss under a policy or coverage part, subject to the policy's conditions. A per-claim limit applies to a particular claim, while an aggregate limit generally applies across claims during a defined period. Deductibles, self-insured retentions, exclusions, and other terms can affect the amount paid. For a civil engineering firm, owners may compare limits with contract requirements and consider whether limits are shared across projects or claims. A stated limit does not mean the insurer will pay that amount for every event, and it does not establish that a claim is covered. Firms may carry different limits across professional liability, general liability, and other policies. The declarations and full policy wording describe how limits apply. See ACEC for engineering firm resources.
How owners use it
- Owners compare requested contract limits with the declarations for each relevant policy and coverage part.
- A firm tracks per-claim and aggregate limits separately when reviewing multiple projects or potential claims.
- If the per-claim limit is $2,000,000 and the covered claim is $750,000, the claim amount is below the limit by $2,000,000 - $750,000 = $1,250,000, subject to other policy terms.
- Owners review deductibles and exclusions alongside the limit because the limit alone does not determine payment.
