The maximum amount the insurance company will pay for a particular loss is known as what?

The correct response reflects the term "Limits of liability," which specifically refers to the maximum amount that an insurance company is obliged to pay for a particular claim or loss as set forth in an insurance policy. This limit is critical as it defines the extent of the insurer's financial responsibility under the terms of the policy. Understanding limits of liability helps policyholders know how much coverage they have and also informs them of the maximum compensation they can receive for losses incurred.

In contrast, the other terms mentioned do not pertain directly to the maximum payout of an insurance policy. "Liberalization" refers to a provision in an insurance policy that allows for coverage enhancements without additional premium charges if the enhancements are offered by the insurer. "Estoppel" involves preventing a party from arguing something contrary to a previous statement or behavior, particularly in legal contexts. "Indemnity" relates to the principle of compensating someone for loss or damage; however, it does not specifically denote the maximum payout limit. Understanding these distinctions emphasizes the importance of knowing the limits of liability when considering insurance coverage options.