Which of the following policy limits is NOT restored after payments on losses?

Rationale

Aggregate limits are NOT restored after payments on losses.

Aggregate limits represent the maximum amount an insurer will pay for multiple claims during a policy period. Once a loss occurs and payments are made, the remaining aggregate limit decreases and does not reset until the next policy period, unlike other limits which may be restored after a loss.

A (Per person) YOUR ANSWER

Per person limits specify the maximum payout for an individual claimant in a single incident. After a loss occurs, this limit is typically restored, allowing for payments to additional claimants in future incidents as long as they don't exceed the limit.

B (Aggregate) CORRECT

Aggregate limits are designed to cap the total payouts across all claims within a policy period. Unlike per person or per accident limits, once payments are made against these limits, they do not replenish until the policy period renews, making this option the correct choice.

C (Per accident) YOUR ANSWER

Per accident limits establish the total payout for all claims arising from a single accident. Similar to per person limits, once a claim is settled, this limit is typically restored for subsequent accidents within the same policy period.

D (Occurrence) YOUR ANSWER

Occurrence limits apply to the total payouts for all claims resulting from a single occurrence or event. After a payment is made, this limit is usually restored, allowing for coverage of future claims stemming from different occurrences within the same policy.

Conclusion

In summary, while per person, per accident, and occurrence limits are restored after losses are paid, aggregate limits do not reset during the policy period. This distinction is crucial for understanding insurance policy coverage and managing potential liabilities effectively. The aggregate limit's inability to replenish after claims are paid highlights the importance of careful risk assessment and policy selection.

Which of the following policy limits is NOT restored after payments on losses?

Aggregate limits are NOT restored after payments on losses.

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