Sub-limit
A specific cap, lower than the overall limit, applying to a particular cover or type of loss.
A sub-limit is a cap, lower than the policy's overall limit, that applies to a particular category of claims or covers. The insurer covers the risk but bounds its exposure on items it sees as more volatile, harder to model or prone to accumulation. A sub-limit never increases the overall cover; it carves it up, and a sub-limited item can consume only a fraction of the total cap. In cyber, it is the standard tool for capping ransom payments, funds transfer fraud or business interruption caused by a third-party provider. Insureds need to read the sub-limits closely. A high overall limit can hide much lower internal caps on the covers that actually matter when a loss hits, and this is a frequent source of misunderstandings when the indemnity comes in below the headline limit.
Worked example: a cyber policy carries an overall limit of 5 million euros but a sub-limit of 250,000 euros for funds transfer fraud, so an 800,000-euro fraudulent transfer is indemnified only up to the sub-limit.
sub-limit, sublimit, inner limit
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