What type of limit does an insured have when claims from a single incident are capped at a specific monetary amount?

When claims from a single incident are capped at a specific monetary amount, this is known as a per occurrence limit. This type of limit applies to each individual event or incident where a claim is made. For example, if a policy has a per occurrence limit of $100,000, it means that for each separate event causing loss or damage, the insurance will pay up to $100,000.

This is crucial because it defines the maximum the insurer will pay for all claims stemming from a single incident, thereby providing clarity to both the insured and the insurer about the coverage available for specific occurrences.

In contrast, other types of limits, such as combined single, aggregate, and per claim, serve different functions in insurance policies. Combined single limits encompass both bodily injury and property damage in one total limit, while aggregate limits represent the maximum amount paid during the policy term across all claims. A per claim limit, although similar to per occurrence, typically pertains to individual claims but doesn’t differentiate among incidents within a single event. Therefore, the per occurrence limit is distinct in establishing a clear cap for each individual incident.