Property and Casualty Insurance Practice Exam

What is meant by 'per occurrence' in insurance terminology?

1. A loss that occurs only on weekends

2. A loss that occurs at a specific time or place

3. A loss that is ongoing over many years

4. A loss that only involves property damage

The correct answer is: A loss that occurs at a specific time or place

The term 'per occurrence' in insurance terminology refers to a specific event or incident that results in a loss. This concept is integral to understanding policy limits, as it determines how losses are calculated and compensated. When a policy has a 'per occurrence' limit, it means that the insurer will pay up to a specified amount for each individual covered event that leads to a claim. In the context of the provided choices, the correct answer highlights the importance of defining a loss's timing and location. A 'per occurrence' limit is focused on distinct incidents rather than a timeframe or setting. Thus, it frames the claim's eligibility around events rather than the nature or characteristics associated with a loss. To further clarify, the other options do not capture this idea accurately. A loss that occurs only on weekends implies a limitation based on time rather than a distinct event. An ongoing loss over many years does not fit within the concept of per occurrence, as it suggests continual loss rather than discrete events. Lastly, a loss that only involves property damage does not encapsulate the broader application of the term, which can apply to various types of losses, not restricted to property. Thus, the focus on a specific time or place in the terminology is essential for understanding how insurance