[BUG] Usage limit pop up appears when the issue was Rate Limited

Preflight Checklist

• [x] I have searched existing issues and this hasn't been reported yet
• [x] This is a single bug report (please file separate reports for different bugs)
• [x] I am using the latest version of Claude Code

What's Wrong?

While working on the Claude Code for VS code I get the "_API Error: Server is temporarily limiting requests (not your usage limit) · Rate limited_" but the pop up for Usage limit reached appeared above the input box.

At first I didn't notice the API error and thought it was usage limit but after investigating found it's a bug.

What Should Happen?

It should show different messages for different api errors.

Error Messages/Logs

API Error: Server is temporarily limiting requests (not your usage limit) · Rate limited

Steps to Reproduce

1. Open Claude Code For VS code.
2. Open more then 8-12 tabs and give a task in every tab.
3. You might get the Rate limit API error.

If you have any other method to get Rate Limit API error then use that, because I only got that error once.

1. You will be able to see the issue a warning yellow popup will appear above the input box saying You've reached your usage limit _View Usage_

Claude Model

Opus

Is this a regression?

I don't know

Last Working Version

_No response_

Claude Code Version

4.8

Platform

Anthropic API

Operating System

Ubuntu/Debian Linux

Terminal/Shell

VS Code integrated terminal

Additional Information

_No response_