UPDATED: Mar 13, 2020
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The stop loss as defined in insurance policies is the point at which an insurance company has paid out the full value of the policy and no further claims can be applied against this insurance policy. It is important to note that in the case of most insurance policies where premiums are paid monthly but the insurance is for a set period of coverage – this does not absolve the policy holder of paying out any final installments due under the coverage period of the insurance policy.
How do I know what the stop loss point of my policy is?
There are two limits that are usually defined on any American insurance policy, the first is often on a per-claim basis, and this is the maximum amount of benefit that can be claimed in the instance of any individual claim against the policy.
The second is the per policy claim limit, which defines the overall maximum benefit payable under a give insurance policy. This number is sometimes the same as the per claim limit and is sometimes different from it, it depends on the individual policy that has been taken out.
To determine the per policy and per claim limits that apply to your policy, you should first check the contract and see if these amounts are clearly laid out in it. If after this point you find yourself still uncertain as to the per policy and per claim limits, you should contact the insurance agent or insurance broker who sold you the policy. They will be able to help you understand what exactly the limits are on your policy.
So in effect the stop loss point of a policy is equivalent to the per policy limit on that agreement, which may or may not be the same as the per policy limit.
For example; you have an insurance policy which has a per claim limit of $20,000 and a per policy limit of $100,000.
Under this policy you can make up to 5 individual claims totaling $20,000 each (or more – though you will be expected to pay any excess amount on each claim) before you reach the stop loss point of $100,000. Alternatively you could make 20 claims of $5,000 each prior to reaching the stop loss point on your insurance policy.
It is important to understand the value of your stop loss point because it enables you to determine whether you have sufficient protection in the case of a claim.