After a claim payment, what will be the new liability limits for James' policy?

To determine the new liability limits for James' policy after a claim payment, it is key to understand how claim payments impact a policy's liability limits. When a claim is paid out, the limit of coverage available under the policy typically decreases by the amount of the claim.

In this scenario, if the new limits of $135,000 / $485,000 are the result of a claim payment, they suggest that the original coverage before the claim was likely higher and was reduced by the amount of the claim paid.

The figures of $135,000 and $485,000 reflect a logical adjustment based on a claim that would have brought the limits down from their original values. This understanding aligns with standard practices in insurance where limits are adjusted downward after a payout.

Being able to calculate these changes helps policyholders comprehend how their coverage acts in conjunction with claim events, ensuring that they remain informed of their risk exposure and available coverage for future incidents.