AMOUNT COVERED Meaning and
Definition
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Amount covered refers to the maximum limit or sum of money that an insurance policy is liable to pay out in the event of a claim. It is the specific monetary value that an insurer agrees to compensate the insured party for covered losses or damages. The amount covered is typically stated clearly in the policy contract and is agreed upon by both the insurer and the policyholder.
When purchasing an insurance policy, individuals or businesses often need to decide on the appropriate amount of coverage required for their specific needs and circumstances. This determination involves considering factors such as the potential risks, the value of the insured property or assets, and the desired level of financial protection. In the case of property insurance, the amount covered may be based on the estimated cost of rebuilding or replacing the property in the event of a covered loss. For liability insurance, it may represent the maximum amount the insurer will pay towards legal costs or damages resulting from a covered claim.
It is crucial for policyholders to carefully review their insurance policies to determine the amount covered. Failure to obtain adequate coverage could leave the policyholder financially vulnerable in the event of a loss or liability claim. Similarly, over-insuring can result in unnecessary expenses. Hence, understanding and selecting an appropriate amount covered is essential for ensuring adequate protection while managing insurance costs effectively.
Common Misspellings for AMOUNT COVERED
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Etymology of AMOUNT COVERED
The word "amount" comes from the Old French word "amonter", which means "to go up, to amount to". It is derived from the Latin word "amontare", which has a similar meaning. The word "covered" comes from the Middle English word "coveren", which is traced back to the Old French word "covrir", meaning "to cover". So, the etymology of "amount covered" is a combination of Old French and Latin roots.
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