Which statement correctly distinguishes per-occurrence limit and aggregate limit?

• A. The per-occurrence limit applies to the total payments across all claims in the policy period
• B. The aggregate limit resets annually for new policy years
• C. The per-occurrence limit is higher than the aggregate limit by default
• D. The per-occurrence limit applies to each claim; the aggregate limit caps total payments within the policy period

Answer: (D)

Think of limits like two separate ceilings. The per-occurrence limit is the maximum the insurer will pay for a single incident or claim. The aggregate limit is the maximum the insurer will pay for all losses during the policy period. The statement that the per-occurrence limit applies to each claim and the aggregate limit caps total payments within the policy period is the true distinction. This means multiple claims can each be paid up to the per-occurrence amount, but the combined payments across all claims cannot exceed the aggregate limit. The other options mix up these roles or introduce policy-specific details that aren’t about the basic difference between per-occurrence and aggregate limits.