What is a "sublimit" in an insurance policy?

A sublimit in an insurance policy refers to a specific limit of coverage that applies to a certain type of loss or peril, rather than the overall maximum coverage of the policy. This means that while the policy may provide a broad coverage limit for many types of claims, certain categories or types of claims will have a lower limit imposed on them.

For example, a homeowners policy might cover personal property up to a total of $100,000, but within that, it could set a sublimit for jewelry at $5,000. This means that in the event of a loss involving jewelry, the maximum amount the insurer would pay is capped at $5,000, regardless of the overall policy limit being higher.

This understanding of sublimits helps policyholders to recognize the potential restrictions on their coverage, ensuring they are adequately insured for specific types of valuable assets or risks that may not be fully covered under the general limits of their policy.