What is meant by "per occurrence" limits in a liability policy?

"Per occurrence" limits in a liability policy refer specifically to the coverage amounts that apply to each individual claim or event. This means that for every separate incident that leads to a liability claim, the policy will pay out up to the specified limit. If multiple claims arise from different occurrences, each claim would have the potential for its full limit of coverage under the policy.

This is significant because it ensures that an insured party can recover damages for multiple incidents without depleting the overall limit of their policy. For instance, if a policy has a per occurrence limit of $500,000, the insured can make several claims, each related to different occurrences, and each claim can receive as much as $500,000 up to the overall policy limits.

In contrast, the other types of limits mentioned in the other choices do not capture the essence of "per occurrence." Overall coverage limits for the policy period would apply to all claims during the duration of the policy, whereas limits that apply to cumulative claims in a year would aggregate claims rather than addressing each occurrence individually. Limits based on geographical coverage relate to the location of the policy's effectiveness rather than the nature of claims.