What are "policy limits"?

"Policy limits" refer specifically to the maximum amounts that an insurer will pay for covered losses as stated in an insurance policy. This concept is fundamental to understanding the financial scope of an insurance agreement, as it delineates the insurer's liability and the extent of coverage provided to the policyholder. For example, if a policy has a limit of $100,000 for property damage, that is the maximum amount the insurer will compensate the policyholder for a claim related to property damage.

The other options do not accurately capture the definition of policy limits. Minimum coverage requirements pertain to legal mandates governing insurance policies but do not reflect the specific limitations set forth in individual policy agreements. The count of claims a policyholder can file does not pertain to the financial boundaries of coverage but rather to the terms of filing claims, which is a separate issue. Additionally, restrictions on an insurer's services would involve contractual stipulations but would not define the monetary limits of coverage for losses.