What does the per-occurrence limit specify?

• A. The maximum amount payable for BI/PD for the entire policy period.
• B. The total premium payable for the policy year.
• C. The maximum amount payable for BI/PD caused by all claims in the policy period.
• D. The maximum amount payable for BI/PD caused by a single occurrence.

Answer: (D)

The main idea being tested is how the per-occurrence limit works. This limit sets the maximum amount the insurer will pay for bodily injury and property damage resulting from a single insured event. In other words, for one accident or incident, the policy will cover up to that limit, regardless of how many people are injured or how much total damage occurs. If the event causes more damage than the limit, the insured would be responsible for the amount beyond the limit.

This is different from an aggregate limit, which caps the total BI/PD payments for all claims that arise during the policy period, no matter how many separate occurrences happen. The per-occurrence limit applies to each individual event, not to the entire year. That’s why the correct statement is that the per-occurrence limit is the maximum payable for BI/PD caused by a single occurrence.