Coverage limits and deductibles are two different numbers on your policy that both affect how much you pay when a claim happens. Your deductible is what you pay first out of pocket. Your coverage limit is the maximum your insurer will pay. They work together, but they serve very different purposes.
Your deductible is the amount you are responsible for before insurance begins to pay. If your deductible is $1,000 and you have a $10,000 claim, you pay $1,000 and your insurer pays $9,000. The deductible is your share of the risk. Higher deductibles lower your premium because you are agreeing to absorb more cost upfront.
Your coverage limit is the ceiling — the most your insurer will pay for a covered loss. If your liability limit is $100,000 and a court awards $150,000 in damages against you, your insurer pays $100,000 and you owe the remaining $50,000. Limits can be per occurrence, per person, or per policy period depending on the coverage type.
Think of it this way: the deductible is the floor and the coverage limit is the ceiling. For a $15,000 loss with a $1,000 deductible and a $20,000 limit, you pay $1,000 and the insurer pays $14,000. But if that same loss were $25,000, you would pay $1,000 plus the $5,000 that exceeds your limit — a total of $6,000 out of pocket.
We see clients who focus on one number and ignore the other. A low deductible feels good until you realize your limits are too thin to protect you in a serious loss. At Truscott, we look at both together and make sure your policy is balanced. Request a Truscott coverage review and we will check that your limits and deductibles are working in your favor.
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