What is meant by “shared limit” coverage in liability insurance?

"Shared limit" coverage in liability insurance refers to a limit that applies to multiple insured parties under the same policy. This means that the total amount of coverage available is shared among all insured individuals covered by the policy. If one party incurs a claim, the payout reduces the amount available for other insured parties under the same policy. This type of limit is particularly common in various commercial liability policies, where multiple individuals or entities are covered.

Understanding this concept is important for assessing the potential risk and exposure in situations where multiple parties are sharing the same insurance coverage. Each party must be aware that their claims will impact the overall limit available for all insured parties, which can lead to complications in coverage if one or more parties exhaust the limit with significant claims.