Sublimit
Definition
A limit within the overall policy limit that applies to a specific type of loss or category of property. Sublimits restrict coverage for certain items below the main policy limit.
Example
A property policy has a $500,000 limit but includes a $5,000 sublimit for jewelry. If $50,000 worth of jewelry is stolen, only $5,000 is covered, even though the overall policy limit hasn't been reached.
In Practice
Sublimits are used to control exposure for high-value or high-risk items. Common sublimits apply to jewelry, fine arts, cash, and certain types of property. Policyholders can often increase sublimits via endorsement for additional premium. Understanding sublimits is crucial to avoid coverage gaps.