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).  

Limit of Liability Coverage Limits - Insuropedia

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 Lemonade, we refer to this as “Extra Coverage”—here’s what you need to know

Please Note: These definitions don’t alter the terms, conditions, exclusions, or limitations of policies issued by Lemonade. They are intended for educational purposes only - they’re not meant to be used in lieu of professional legal or financial advice. We’ll do our best to keep them updated, but they may not always reflect current industry developments. Feel free to use the terms with attribution (friends don’t let friends plagiarize!)

Property and casualty insurance provided by Lemonade Insurance Company, 5 Crosby St., 3rd floor, New York, NY 10013. Life Insurance provided by North American Company for Life and Health Insurance®, Administrative Office, One Sammons Plaza, Sioux Falls, SD 57193.

Lemonade Insurance Agency, LLC (LIA) is acting as the agent of Lemonade Insurance Company and Lemonade Life Insurance Agency, LLC (LLIA) is acting as the agent of North American Company for Life and Health Insurance®. Both LIA and LLIA receive compensation based on the premiums for the insurance policies each sells. Further information is available upon request.

LLIA is a sub-producer of Bestow Agency, LLC. Life insurance quotes are provided by Bestow Agency, LLC dba Bestow Insurance Services in CA, who is the licensed agent. Term Life insurance policies are issued on North American Company for Life and Health Insurance® policy form LS181 and LS182, or state version including all applicable endorsements and riders. Products or issue ages may not be available in all jurisdictions. Limitations or restrictions may apply. Not available in New York. Our application asks about your lifestyle and health; your answers allow us to save you time and avoid offline medical exams.