A liability policy has $10,000 per occurrence, $50,000 aggregate limit. At different × during the policy period, three people are injured to the amount of $15,000 each. What amount would each person receive?

Rationale

Each person would receive $10,000.

The liability policy has a per occurrence limit of $10,000, which means that for each individual incident, the maximum amount that the insurer will pay is capped at this value. As each of the three people is injured for $15,000, the policy will only cover up to $10,000 for each claim.

A ($10,000) CORRECT

This choice is correct because the policy's per occurrence limit restricts the payout for each individual's claim to $10,000, despite their injuries totaling $15,000 each.

B ($15,000) YOUR ANSWER

This choice is incorrect because the liability policy specifically caps payouts at $10,000 per occurrence. Although the injuries are assessed at $15,000 each, the insurer will only pay up to the limit of the policy, which does not cover the full amount.

C ($20,000) YOUR ANSWER

This choice is also incorrect. The policy does not allow for any individual to receive more than the $10,000 limit per occurrence, regardless of the total injury amount. Therefore, the $20,000 figure inaccurately represents the combined total of injuries but does not reflect the policy's payout structure.

D ($50,000) YOUR ANSWER

This choice is incorrect as well because it misinterprets the aggregate limit of the policy. While the aggregate limit is $50,000, it does not mean that each individual can receive that amount; it merely indicates the total maximum the insurer will pay across all claims. Each person still receives only $10,000.

Conclusion

In this scenario, each injured party receives $10,000 due to the policy's per occurrence limit, which restricts payouts to this amount regardless of the higher claims for their injuries. The aggregate limit of $50,000 applies collectively to all claims but does not alter the individual limits imposed by the policy. Understanding these limitations is essential in accurately assessing insurance payouts in liability cases.

A liability policy has $10,000 per occurrence, $50,000 aggregate limit. At different × during the policy period, three people are injured to the amount of $15,000 each. What amount would each person receive?

Each person would receive $10,000.

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