What does the per occurrence limit refer to in insurance policies?

The per occurrence limit in insurance policies specifically refers to the maximum payout that the insurer will provide for all losses arising from a single event or occurrence. This means that, no matter how many claims are made as a result of that singular event, the total payout will not exceed this predetermined limit.

This concept is crucial for policyholders to understand as it dictates the extent of coverage available for incidents such as property damage or liability claims that stem from one specific occurrence. For instance, if an insured party is involved in an incident that causes multiple claims—like a car accident affecting several vehicles—the per occurrence limit sets the cap on how much the insurer will pay for all those claims combined.

Understanding this limit helps policyholders assess their risks and ensure they have adequate coverage, as exceeding the per occurrence limit may leave them financially responsible for any amounts beyond it.