Limit of Liability

Limit of liability refers to the max amount of money your insurer is on the hook for if something bad happens to you, your stuff, or your property. 

Limit of liability and your insurance policy

For each coverage type specified in your policy (like personal property, personal liability, or loss of use), your insurance company indicates the particular limit of liability: the upper limit of what they’ll pay you for a covered claim.  

Here’s a sample breakdown of hypothetical limits of liability for a typical homeowners insurance policy (the limit of liability is what you see under the ‘MAX’ column).  

Special limits of liability

In both homeowners and renters insurance, we find what are known as ‘special limits of liability.’

This refers to limits on specific types of valuable items you may own, like your jewelry, watch, bike, money, electronics, etc. In general, valuable items like these are generally insured up to around $2,500.

Let’s say you have a basic homeowners policy with a limit of liability of $2,500 on jewelry. One day, your apartment gets robbed, and you notice your engagement ring went missing. It cost $7,000, but your covered claim will only reimburse you $2,500 (after you pay your deductible). 

In this case, it would have made sense to “schedule” your engagement ring, which is a technical term for adding additional protections for it. At CBS, we refer to this as “Extra Coverage”