What does the term "Limits Offset" refer to in insurance policy language?

"Limits Offset" refers to a scenario in which the payments made by an insurance policy are reduced by the amount already covered by another party's insurance, specifically the at-fault driver's insurance. In the event of an accident, if the insured has a claim and the at-fault party's insurance pays a portion of the damages, the limits of coverage from the insured's policy may be adjusted downwards by that amount. This is a common practice designed to prevent any duplication of payments for the same loss, ensuring that any payment made is in alignment with the total loss incurred, factoring in other insurance contributions. This mechanism helps maintain the integrity of insurance payouts and ensures fair compensation while protecting insurers from overextending their liabilities.