# Policy Limit

*Insurance — Finicade finance glossary*

A policy limit is the most an insurer will pay, per claim or per year. Sub-limits sit inside it for specific categories — jewellery, cash, water damage — and are where underinsurance usually hides. Liability limits are the ones worth stress-testing: a serious injury judgment can far exceed a standard auto policy's limit, and the excess comes from your own assets.

**Also known as:** coverage limit, sum insured, sub-limit

**Related terms:** [Umbrella Policy](https://finicade.com/glossary/umbrella-policy), [Liability Coverage](https://finicade.com/glossary/liability-coverage), [Insurance](https://finicade.com/glossary/insurance), [Exclusion](https://finicade.com/glossary/exclusion), [Replacement Cost vs Actual Cash Value](https://finicade.com/glossary/replacement-cost-vs-actual-cash-value)

Source: https://finicade.com/glossary/policy-limit