Certified Professional in Health Care Risk Management (CPHRM) Practice Exam 2026 - Free CPHRM Practice Questions and Study Guide

Policy limits in insurance refer to the maximum amount that an insurer will pay for claims made under a specific policy. This value is established in the terms of the insurance contract and represents the financial cap on coverage provided by the insurer. Understanding policy limits is crucial for both the insurer and the insured, as they define the extent of the financial protection afforded in the event of a loss.

In the context of health care risk management, knowing the policy limits helps stakeholders assess the risks associated with potential claims and plan accordingly to mitigate those risks. Policyholders need to be aware of their specific limits to ensure adequate coverage and to avoid situations where they may incur out-of-pocket expenses exceeding the policy coverage in the event of a significant claim.

The other aspects, such as minimum reimbursement, annual premiums, and deductibles, relate to different components of insurance policies and do not pertain directly to the concept of policy limits.