Question

What sublimit in a liability policy sets the maximum amount for all claims arising from a single accident?

A) Aggregate limit
B) Occurrence limit
C) Per-accident limit
D) Annual limit

Answer 1

The per-accident limit sets the maximum amount for all claims arising from a single accident in a liability policy. (option c)

Step-by-step explanation:

In a liability policy, the per-accident limit sets the maximum amount that the insurance company will pay for all claims arising from a single accident.

For example, if a liability policy has a per-accident limit of $1 million, this means that, regardless of the number of individual claims filed, the maximum amount the insurer will pay for all claims arising from a single accident is $1 million. This limit helps insurance companies manage their risk exposure and provides clarity to policyholders regarding the maximum coverage available for a single incident.

The correct answer is (C) Per-accident limit, which establishes the maximum amount available for all claims related to a single accident under a liability policy. Understanding these policy limits is crucial for both insurers and policyholders to ensure appropriate coverage and risk management.