What does the term 'per occurrence' refer to in insurance coverage?

The term "per occurrence" refers specifically to the maximum amount of money that an insurance policy will pay for a single claim or event. This limit is crucial because it defines how much an insurer is obligated to cover in the event of a loss resulting from an incident, such as a liability claim or property damage.

In liability insurance, for example, if a policy has a per occurrence limit, it means that for each separate claim arising out of a specific event, the insurer will pay up to the specified limit. This can be important in scenarios where multiple claims arise from a singular incident, as each claim will be assessed individually against this limit.

Understanding this term helps policyholders and potential buyers of insurance grasp the extent of coverage available under their policies and ensures they can adequately assess their risk management needs.