Question

Which of the following correctly defines a per- incident limit?

(A) Maximum dollar amount company will pay out one policy for the lifetime of the pet
(B) Maximum dollar amount an insurance company will pay out per incident filed
(C) Injury or illness contracted, manifested, or incurred before the policy effective date
(D) An extension of coverage that can be purchased and added to a base medical policy

Answer 1

A per-incident limit is the maximum amount an insurance company will pay for each separate incident filed, which is part of the cost-sharing measures like deductibles and copayments designed to reduce moral hazard.

Step-by-step explanation:

The correct definition of a per-incident limit is the maximum dollar amount an insurance company will pay out for each separate incident filed by the insured party. Option (B) — Maximum dollar amount an insurance company will pay out per incident filed — is the accurate definition. This term is related to various insurance policy structures that include deductibles, copayments, or coinsurance. These are all methods by which the cost is shared between the insurer and the insured to reduce moral hazard, prompting the policyholder to assume a portion of the costs before insurance benefits are collected.