Why is it important for insurance policies to have defined coverage limits?

Having defined coverage limits in insurance policies is crucial because it protects the insurer from having to pay more than a specified amount for claims. This limit establishes a ceiling on the insurer's liability, which helps maintain the financial stability of the insurance company. If there were no limits, insurers could face overwhelming losses in the event of large disasters or numerous claims, which could jeopardize their ability to operate effectively.

Additionally, defined limits help ensure that premiums are set at a level that reflects the risk assumed by the insurer. This balance between coverage offered and the potential risk taken on allows the insurance market to function efficiently, ensuring that policies are both affordable for consumers and sustainable for providers.

While the other options may address various aspects of the insurance process, they do not serve the primary purpose of coverage limits as directly as option B. For instance, minimizing premium prices or providing unlimited protection could lead to financial issues for insurers without proper limits in place.