If two named insureds are sued for the same incident, the policy limit applies to:

• A. Each insured separately up to the limit.
• B. The entire limit per claim.
• C. $300,000 per insured.
• D. $600,000 total liability.

Answer: (B)

When a liability policy covers more than one named insured, the limit of liability is applied per claim, not per insured. If two insureds are sued for the same incident, there is only one claim arising from that incident, so the insurer pays up to the single policy limit for that claim. The entire limit is available to satisfy that one incident, regardless of how many insureds are involved. This prevents duplicating coverage for the same wrongdoing and keeps the pool of funds focused on the incident in question. If there were separate incidents, each could generate its own claim and use the limit accordingly, but for a single incident the full limit applies to that claim.