What term refers to the maximum amount that can be paid for a covered loss?

The term that refers to the maximum amount that can be paid for a covered loss is "Coverage Limit." This concept is crucial in insurance policies as it defines the maximum financial liability the insurer assumes for the insured loss. When policyholders file a claim for a covered event, the coverage limit is the threshold that determines how much compensation they would receive, ensuring clarity and fairness in the indemnification process.

Understanding coverage limits is essential for both consumers and insurance professionals, as it helps policyholders choose the appropriate level of protection based on their needs while also providing insurers with a basis for risk assessment and premium calculations. This term succinctly captures the financial boundaries of an insurance contract, making it a key component of policy comprehension.

Other terms, while related to legal or contractual matters within the realm of insurance, do not specifically address the maximum payout for loss coverage. Consideration typically refers to something of value exchanged in a contract, waiver involves relinquishing a right or claim, and estoppel pertains to preventing someone from arguing something contrary to a previously established fact.