Which type of limit allows for coverage up to a specific limit per claim?

The correct answer focuses on the concept of a "per occurrence limit." This type of limit specifies that for each individual claim or incident, there is a maximum amount that the insurance policy will cover. This means if a policyholder faces multiple claims arising from separate occurrences, each can be evaluated independently up to the specified limit.

For instance, if a property insurance policy has a per occurrence limit of $100,000, any single claim resulting from a specific incident can be paid up to that amount, regardless of the total number of claims filed during the policy period.

This is essential because it provides clarity and predictability for policyholders, knowing they have a specific amount available for each distinct event or claim. It is particularly relevant in situations where several separate incidents may occur, as opposed to aggregate limits that encompass all claims within a certain timeframe, typically making it more beneficial for high-frequency, low-severity risks.