Out-of-Pocket Maximum
Definition
The maximum amount you will pay for covered losses before the insurer covers the rest. While common in health insurance, the concept also applies to P&C insurance through deductibles, coinsurance, and coverage limits working together to define your total financial exposure.
When This Matters
With a $2,500 deductible and $500,000 dwelling limit, your maximum out-of-pocket for a single covered dwelling loss is $2,500 — the insurer covers up to $500,000 above that.
Related Terms
Have a question about out-of-pocket maximum?
Ask the Professor about Out-of-Pocket Maximum →