The policy limit is the maximum amount an insurance company will pay for claims under a policy, typically structured as either per-incident limits (maximum for a single claim) or aggregate limits (maximum for all claims during the policy period). Some policies combine all types of losses under a single limit, while others separate first-party and third-party coverage. For example, a policy might have a $5 million per-incident limit and $10 million aggregate limit, meaning no single claim can exceed $5 million and total claims cannot exceed $10 million.
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