If the amount of damages claimed by another party exceeds your policy limits (the maximum amount that your insurance company will pay), then you may have to pay for any excess amount out of your own pocket. This can happen if: You have low policy limits compared to high potential damages You have multiple claims filed against you within one policy period You have excluded coverages under your policy (such as intentional acts) To avoid this situation, you should review your policy regularly and make sure that it provides adequate coverage for your needs and risks.