With its financial jargon, car insurance can baffle anyone. It may even look like an unnecessary expenditure, considering only a few people actually meet with accidents that are claimable against their car insurance coverage. However, if your insured car were to ever be in an accident, Per Occurrence Limit is undeniably one of the most important insurance terms that will come into play. This article explains Per Occurrence Limit and the position it holds in a car insurance policy.
Per Occurrence Limit is the maximum total amount that an insurance company will pay for a particular occurrence. Occurrence here refers to a car accident that results in injury and damage. Per Occurrence Limit should not be confused with Per Claim Limit. The first one refers to the limit on an occurrence taking place at any time within the policy period, irrespective of when the claim was made. The second one, however, refers to the limit of a claim that was made by the policyholder. Per Claim Limits and deductibles have to be "claimed" and hence may result in losses. Car insurance policies with Per Occurrence Limits provide more comprehensive coverage.
Split-limit coverage uses three factors to determine limits. These are Body Injury Liability per person, Bodily Injury Liability per accident, and Property Damage Liability. It is when Bodily Injury Liability Coverage is purchased in split limits that the second limit becomes the Per Occurrence Limit.
Per Occurrence Limits are usually agreed upon by policy buyers keeping in mind their state's average standard values. However, anyone buying a car insurance policy should make sure the Per Occurrence Limit is high enough to comfortably accommodate the maximum possible loss that may result from a single occurrence. The Comprehensive Coverage of an older vehicle must have a higher Per Occurrence Limit for the policyholders' benefit. The acceptable value of Per Occurrence Limits is usually taken to be $300,000. It depends on several factors including the car model's history of reliability and company rules. Insurance companies may press for smaller limits in order to minimize potential losses.
Insurance companies are essentially driven by profits rather than goodwill. If they were to go without Per Occurrence Limits, they would end up losing millions of dollars fulfilling claims. Also, some individuals might claim money feigning accidents, thus further adding to their losses. As a result, all car insurance companies impose Per Occurrence Limits to minimize their losses. However, this doesn't mean that you will have to do without adequate coverage. Keep your overall coverage requirements in mind and then shop around to make sure that you grab the best Per Occurrence Limit in the industry.