What term denotes the maximum amount of money the insurer will pay for a particular loss, or for loss during a period?

What term denotes the maximum amount of money the insurer will pay for a particular loss, or for loss during a period?

• A. Limits of Liability
• B. Premium
• C. Deductible
• D. Subrogation

Answer: (A)

Limits of liability determine how much the insurer will pay for covered losses, either for a single event or for the total losses during the policy period. This cap is the maximum the insurer will contribute, after accounting for the deductible. Often policies have a per-occurrence limit (for one loss) and an aggregate limit (the total for the term). For example, with a $100,000 per-occurrence limit and a $300,000 aggregate limit, a single loss cannot be paid beyond $100,000, and all losses combined in the policy term cannot exceed $300,000. The deductible is separate and is paid by the insured before the insurer contributes, and the premium is the cost of maintaining the policy. Subrogation is the insurer’s right to pursue the responsible party after paying a claim.

Limits of liability determine how much the insurer will pay for covered losses, either for a single event or for the total losses during the policy period. This cap is the maximum the insurer will contribute, after accounting for the deductible. Often policies have a per-occurrence limit (for one loss) and an aggregate limit (the total for the term). For example, with a $100,000 per-occurrence limit and a $300,000 aggregate limit, a single loss cannot be paid beyond $100,000, and all losses combined in the policy term cannot exceed $300,000. The deductible is separate and is paid by the insured before the insurer contributes, and the premium is the cost of maintaining the policy. Subrogation is the insurer’s right to pursue the responsible party after paying a claim.