What does 'territorial limit' refer to in an insurance policy?

What does 'territorial limit' refer to in an insurance policy?

• A. The limit on policyholder's eligibility
• B. The geographical area where coverage is valid
• C. The maximum amount of coverage provided
• D. The duration of the insurance contract

Answer: (B)

The term 'territorial limit' in an insurance policy specifically refers to the geographical area where the coverage is valid. This means that the policyholder is protected against certain risks only within specified locations. For instance, if an insurance policy states that it covers incidents occurring only within a certain country or region, any claims related to incidents occurring outside that geographic area would not be honored. This definition emphasizes the importance of understanding the boundaries of the policy's applicability, ensuring that policyholders know where they can expect to receive coverage for their insured risks. Other options address different aspects of insurance policies: eligibility relates to who can obtain insurance coverage, the maximum amount of coverage pertains to the financial limits of the policy, and the duration concerns how long the policy remains in effect. However, these do not define 'territorial limit' but represent different terms and features associated with insurance policies.

The term 'territorial limit' in an insurance policy specifically refers to the geographical area where the coverage is valid. This means that the policyholder is protected against certain risks only within specified locations. For instance, if an insurance policy states that it covers incidents occurring only within a certain country or region, any claims related to incidents occurring outside that geographic area would not be honored. This definition emphasizes the importance of understanding the boundaries of the policy's applicability, ensuring that policyholders know where they can expect to receive coverage for their insured risks.

Other options address different aspects of insurance policies: eligibility relates to who can obtain insurance coverage, the maximum amount of coverage pertains to the financial limits of the policy, and the duration concerns how long the policy remains in effect. However, these do not define 'territorial limit' but represent different terms and features associated with insurance policies.