When you buy insurance, you probably look at the main coverage limits first — but tucked inside every policy are “sublimits” that can make a big difference when you file a claim.
What are sublimits?
A sublimit is the maximum amount your insurance company will pay for a specific type of loss. They apply to many policies — from commercial property to cyber liability — and they reduce the coverage available for certain claims.
For example, a commercial property policy might cover your building for $500,000, but limit coverage for artwork to $10,000. That smaller cap is a sublimit.
Why do they exist?
Sublimits help insurers manage risk for unusual, hard-to-quantify, or high-cost losses. They keep premiums lower for most policyholders by capping certain payouts.
How sublimits can impact your coverage
- Property: Expensive items like computers, collectibles, or artwork may have lower coverage caps.
- Business Interruption: Many policies limit income replacement to a set period after a loss, such as 14–30 days, and include a waiting period before payments begin.
- Cyber Liability: Sublimits often apply to specific incidents like phishing scams, data breach notifications, or social engineering fraud.
A costly example
Imagine your business has $1 million in cyber liability coverage. A fraudster tricks your accountant into transferring $545,000 to a fake vendor account. You file a claim — only to learn there’s a $250,000 sublimit on “cyber deception” losses. You’re left with $295,000 unrecovered.
How to protect yourself
- Negotiate higher sublimits if you have high-value property or exposures.
- Consider additional policies that cover specific risks.
- Review your policy regularly with your broker to ensure sublimits match your needs.
Bottom line: Sublimits can leave you with big gaps in coverage. Understanding them — and adjusting your policies where necessary — can help you avoid expensive surprises.
Bulger Insurance
We can review your current coverage, explain the fine print, and help you make sure your sublimits work for your business needs. Contact us today.
