Which of the following best describes the coverage limits in a standard homeowners policy?

A standard homeowners policy includes various types of coverage with specific limits that apply to different categories of property and liabilities. These limits are established to protect the insurance company against excessive claims and ensure that policyholders receive adequate but not open-ended financial protection.

Sub-limits are a crucial aspect of homeowners insurance, as they define the maximum amount the insurer will pay for particular types of personal property or specific perils. For instance, there might be sub-limits on valuable items like artwork, jewelry, or collections to protect against loss beyond a certain value. These designated limits help manage risk while still offering some degree of comprehensive coverage.

While the other options refer to concepts inherent in homeowners policies, they do not accurately capture the standard practice of setting specific coverage limits. Unlimited coverage is not typical in standard homeowners policies, as it would expose insurers to significant risk. Replacement cost and actual cash value refer to methods of paying for claims rather than being descriptors of coverage limits. Therefore, the notion that coverage in a standard homeowners policy is subject to sub-limits best describes how coverage is structured within these policies.