Liability Limit
/ˌlaɪəˈbɪləti ˈlɪmɪt/
Definitions
- (n.) A maximum amount of monetary damages or liability that an insurer or a party is obligated to pay under a contract or law.
The insurance policy sets a liability limit of $1 million per occurrence.
- (n.) The defined cap on financial responsibility imposed on a defendant under certain statutes or agreements.
The state's liability limit restricts damages a plaintiff can recover in a tort claim.
Forms
- liability limits
Related terms
See also
Commentary
Liability limits are critical in contract and insurance drafting to control risk exposure; drafters should clearly specify if the limit applies per event, per policy period, or aggregate.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.