What does "policy limits" refer to?

"Policy limits" refers specifically to the maximum amount that an insurance company will pay for a covered loss. Each insurance policy specifies its limits, which set a ceiling on the insurer's financial obligation to the insured in the event of a claim. These limits can vary depending on the type of policy and coverage purchased.

Understanding policy limits is crucial for insured individuals, as it helps them to know the extent of their financial protection in various scenarios. For instance, if a homeowner has a policy limit of $300,000 on their property insurance, that is the maximum the insurer will pay out for any covered damages to that property.

In terms of other options, while the range of services covered is important in assessing a policy, it does not define the monetary scope of coverage. Minimum required coverage pertains to legal requirements and varies by jurisdiction but does not specifically relate to policy limits. Meanwhile, claims adjustment fees refer to administrative costs associated with processing claims, which are distinct from the actual coverage provided by a policy.