What does the term "policy limit" refer to in Illinois insurance regulations?

The term "policy limit" in the context of Illinois insurance regulations refers to the maximum amount the insurer will pay for covered losses under a policy. This is a crucial aspect of any insurance contract, as it defines the ceiling on the insurer's liability in the event of a claim. Understanding the policy limit is vital for policyholders because it determines the extent of financial protection provided by the insurance policy. If a loss or claim exceeds this specified limit, the policyholder would need to cover the excess amount out of pocket.

In Illinois, like in many jurisdictions, policy limits can vary based on the type of insurance—in health, auto, home, or commercial insurance, for example—allowing policyholders to choose limits that align with their individual needs and risk exposure.