Sub-limit in insurance

Sub-limit in insurance means a monetary cap on a particular cover under a policy.For instance, consider a travel insurance policy.

For a $5 lakh cover, the policy provides compensation for flight delay, flight cancellation, baggage delay and lost, emergency medical conditions and personal accident. However, in the case of flight delay, the insurance provides for $100 per day for a maximum of $700. The maximum claim that a policyholder can receive is $700. The sub-limit may be stated in rupees/dollar term or a percentage of the sum assured.

The sub-limits will be listed in the policy document clearly and are common particularly in health insurance policies. It is important for a policyholder to be familiar with various sub-limits in a policy so that unnecessary hassles are avoided at the time of claim settlement. For instance, in health insurance, there are usually sub-limits on room rent on hospitalisation.

If your policy states maximum 2 per cent per day on the policy cover as room rent, you can be prepared to shell out from your pocket when the need arises. If you want to avoid sub-limits, there are insurance companies that offer to opt out of the same, but the premium could be marginally higher.

The writer is an intern with Business Line

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