---
title: "Limit of Liability: Meaning and Examples | Riskado"
description: "A limit of liability is the most an insurer pays for a covered claim. See how per-person, per-accident and combined limits work, with a New York example."
url: "https://riskado.com/insurance-terms/limit-of-liability/"
lang: "en"
published: "2026-08-06"
modified: "2026-10-01"
image: "https://riskado.com/og/default.jpg"
alternates:
  es: "https://riskado.com/es/terminos-de-seguros/limite-de-responsabilidad-civil.md"
---

# Limit of liability

Updated Oct 1, 2026

A limit of liability is the maximum amount an insurance policy will pay for a covered claim, person, accident, occurrence, or policy period. It may be split between bodily injury and property damage or combined into one amount. Covered losses above the limit generally remain the policyholder's responsibility.

Also called: limits, policy limit, limit, limits of insurance, coverage limit, combined limit

A limit of [liability](https://riskado.com/insurance-terms/liability-insurance/) is the ceiling on what your [insurer](https://riskado.com/insurance-terms/insurer/) pays for one kind of covered loss. When damages run higher than that ceiling, the balance can fall to you, so the number on your [declarations page](https://riskado.com/insurance-terms/declarations-page/) matters most on the day of a large claim. The same dollar amount protects differently depending on whether it applies per person, per accident, per claim, or across the [policy period](https://riskado.com/insurance-terms/effective-date/). The limit is a maximum, not an automatic payment: the loss has to be covered, and [exclusions](https://riskado.com/insurance-terms/exclusion/), [deductibles](https://riskado.com/insurance-terms/deductible/) and sublimits still apply.

## How a limit works in a real claim

New York's minimum auto liability limits are $25,000 for bodily injury to one person, $50,000 for bodily injury to two or more people, and $10,000 for property damage in one accident, according to the [New York Department of Financial Services (opens in a new tab)](https://www.dfs.ny.gov/consumers/auto_insurance). The shorthand is 25/50/10. Say one injured person has covered bodily injury damages of $80,000, and the other driver's vehicle has $15,000 of damage. The insurer's payments stop at $25,000 and $10,000.

A 25/50/10 policy and an illustrative claim

Hover or tap a row to highlight it.

| Item | Amount |
| --- | --- |
| Covered bodily injury damages | $80,000 |
| Bodily injury limit, one person | $25,000 |
| Property damage to the other vehicle | $15,000 |
| Property damage limit | $10,000 |
| Total the insurer pays | $35,000 |
| Remaining damages | $60,000 |

The remaining $60,000 is ($80,000 - $25,000) + ($15,000 - $10,000), and the policyholder may be personally responsible for it. The same agency states that the insurer provides a legal defense for covered liability claims without reducing the liability limits.

## Common ways limits are set

A limit comes in several shapes, and each one changes how much a single event can pay.

- **Split limits.** Auto liability is often shown as three numbers, such as 25/50/10: bodily injury per person, bodily injury per accident, and property damage per accident.
- **Combined single limit.** One amount covers bodily injury and property damage from one accident. The [New York Department of Financial Services (opens in a new tab)](https://www.dfs.ny.gov/consumers/auto_insurance) gives $100,000, $300,000 and $500,000 as examples.
- **Per-occurrence and aggregate limits.** A per-occurrence limit applies to one event. An aggregate limit is the most the policy pays for all covered claims during the policy period.
- **Sublimits.** A special limit applies to one category, such as money, jewelry or watercraft, and it does not raise the main policy limit.
- **Umbrella or excess limits.** These add limits above underlying policies, with their own exclusions.

Higher limits expose the insurer to more potential payment and are commonly priced at a higher premium. The actual premium depends on the insurer's rating rules, risk factors, state requirements and policy form, and no universal percentage applies. The guide to the [average cost of car insurance in Connecticut](https://riskado.com/average-cost-of-car-insurance-in-connecticut/) has local pricing context.

## Where you will see a limit

The amount appears on the declarations page, a quote, renewal documents, endorsements, a certificate of insurance and claim letters.

Auto policies carry limits for bodily injury liability, property damage liability, uninsured and underinsured motorist coverage, medical payments and personal injury protection. Homeowners, condo and renters policies show limits for the dwelling, personal property, personal liability and additional living expense; the [Connecticut renters insurance guide](https://riskado.com/connecticut-renters-insurance/) covers the renters version. Business policies carry limits for general liability, professional liability, property and business interruption. In liability and professional insurance, "limit of indemnity" is often used for the same idea, and the limit stated in the policy controls, including whether it applies per claim, per occurrence or in the aggregate, according to the [NAIC glossary (opens in a new tab)](https://content.naic.org/glossary-insurance-terms).

## What Connecticut and New York require for auto liability

State law sets a floor for auto liability limits in both states. [Conn. Gen. Stat. § 14-112 (opens in a new tab)](https://www.cga.ct.gov/current/pub/chap_246.htm#sec_14-112) requires $25,000 for injury or death of one person, $50,000 for injury or death of more than one person in one accident, and $25,000 for property damage. Uninsured and underinsured motorist coverage must carry bodily injury or death limits at least as high as those amounts, under [Conn. Gen. Stat. § 38a-336 (opens in a new tab)](https://www.cga.ct.gov/current/pub/chap_700.htm#sec_38a-336). The minimum is also summarized as 25/50/25 or a $50,000 combined single limit, with uninsured and underinsured motorist coverage of at least 25/50, according to the [Connecticut Insurance Department (opens in a new tab)](https://portal.ct.gov/cid/consumer-information-center/auto-insurance).

New York defines the required owner's policy in [Vehicle and Traffic Law § 311 (opens in a new tab)](https://www.nysenate.gov/legislation/laws/VAT/311), and [11 NYCRR 60-1.1 (opens in a new tab)](https://govt.westlaw.com/nycrr/Document/I5008aa93cd1711dda432a117e6e0f345) sets the minimums: $25,000 for bodily injury to one person who does not die, $50,000 for two or more, $50,000 for one person who dies, $100,000 for two or more who die, and $10,000 for property damage in one accident. New York also requires basic no-fault benefits and uninsured motorist coverage, which are separate from the bodily injury and property damage liability limits. Outside required auto coverage, the policy form decides the number.

## Questions to ask your agent or insurer

1.  What coverage does this limit apply to, and is it per person, per accident, per occurrence, per claim or aggregate? The structure changes the protection.
2.  Are defense costs, attorneys' fees, investigation expenses and settlement costs inside or outside the limit? Defense treatment can change what is left for a settlement.
3.  What exclusions, deductibles, endorsements and sublimits can reduce or eliminate payment? The limit applies only to covered losses.
4.  If damages exceed the limit, what remains my responsibility, and is umbrella or excess coverage available? Amounts above the limit may be yours to pay.
5.  Will the limit change at renewal, and what premium applies to each higher or lower option? The renewal documents show the current limit and premium.

## Frequently asked questions

These short answers cover questions people often ask about limits.

### What happens if my damages exceed my policy limit?

The insurer pays no more than the applicable limit for covered damages, and you may owe the balance. The [California Department of Insurance (opens in a new tab)](https://www.insurance.ca.gov/01-consumers/105-type/95-guides/01-auto/upload/Auto-05122021_Spanish.pdf) states that a policyholder is responsible for damage beyond the purchased liability limits.

### Is a combined single limit the same as split limits?

No. Split limits set separate maximums for bodily injury per person, bodily injury per accident and property damage. A combined single limit sets one maximum for covered bodily injury and property damage from one accident. Connecticut lists a $50,000 combined single limit as an option.

### Does the limit of liability cover my own car?

Auto liability pays for bodily injury or property damage you cause to others. Damage to your own vehicle generally requires collision or comprehensive coverage, if you bought it, according to the [NAIC (opens in a new tab)](https://content.naic.org/consumer/auto-insurance.htm).

### Is a health out-of-pocket limit the same as a liability limit?

No. A health plan's out-of-pocket limit caps what you pay for covered services during the plan year, subject to the plan's rules, according to [HealthCare.gov (opens in a new tab)](https://www.healthcare.gov/glossary/out-of-pocket-maximum-limit/). A liability limit caps what the insurer pays for covered liability or property losses.

## Related terms