PSI Ohio Insurance Practice Exam

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Prepare for the PSI Ohio Insurance Exam. Utilize flashcards and multiple choice questions with hints and detailed explanations. Gear up for success!

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What term is used for the limit on the amount an insurer will pay for a claim?

Deductible
Coverage limit
Policy limit
Excess liability

The correct answer is: Policy limit

The term used for the limit on the amount an insurer will pay for a claim is "policy limit." This is a crucial concept in insurance, as it defines the maximum financial liability an insurance company has for a given claim under a specific policy. Policy limits can vary significantly depending on the type of insurance and the terms agreed upon when the policy was issued. In many cases, policy limits protect both the insured and the insurer by establishing clear boundaries on the extent of coverages provided. For instance, if a policy has a limit of $100,000 for property damage, the insurer will not pay more than that amount regardless of the total claim amount incurred. Understanding policy limits is essential for individuals when assessing their insurance needs and ensuring they have sufficient coverage to protect against potential losses. This understanding aids in making informed decisions about policy types and limits that align with personal or business risk management strategies.