Property and Casualty Insurance Practice Exam

What does the per person limit indicate in an insurance policy?

1. The total amount for all claims in a policy year

2. Maximum payout for injuries to a single person

3. The minimum deductible for each individual claim

4. The limit for property damage claims per incident

The correct answer is: Maximum payout for injuries to a single person

The per person limit in an insurance policy specifically refers to the maximum payout that the insurance company will provide for injuries sustained by a single individual in an accident or incident. This limit is important because it helps to establish the boundaries of financial responsibility for the insurer in cases where multiple people may be injured, ensuring that the claims for each person are managed according to this limit. For policies that include liability coverage, understanding the per person limit is crucial for policyholders, as it directly impacts how much each injured party can receive. If medical bills or damages exceed this limit, the remaining costs would not be covered by the insurance, which could lead to out-of-pocket expenses for the policyholder. This definition highlights the significance of the per person limit, distinguishing it from other types of limits that focus on total payouts for all claims in a given year or for property damage.