In liability coverage, what does the per-occurrence limit specify?

• A. The maximum amount payable for each separate claim
• B. The maximum amount payable for all claims in the policy period
• C. The total premiums payable for all claims
• D. The minimum amount payable per claim

Answer: (A)

The main idea here is how liability limits cap payments for a single event. The per-occurrence limit is the maximum the insurer will pay for damages arising from one incident or accident. If that one incident leads to multiple claims, all of them together are still limited by this same cap for that event. So, for that single occurrence, payments cannot exceed the per-occurrence limit, though the policy may also have an aggregate limit that caps total payments across all claims in the policy period. For example, with a per-occurrence limit of 500,000, an incident causing 600,000 in damages would be paid up to 500,000, with the remaining 100,000 potentially staying with the insured (subject to deductible and any other terms). If another separate incident happens later, a new per-occurrence limit would apply to that event.