What does the Per Occurrence Limit signify in a CGL policy?

The Per Occurrence Limit in a Commercial General Liability (CGL) policy is crucial as it defines the maximum amount the insurance company will pay for damages resulting from a single incident or occurrence. This means that regardless of the total number of claims arising from that particular event, the insurer's payout will not exceed this specified limit. This feature is essential in ensuring that businesses have a clear understanding of their coverage and can manage their financial exposure in the event of a liability claim.

For example, if a business is involved in an incident that causes harm to multiple parties, the Per Occurrence Limit sets a cap on how much the insurer will reimburse in total for all claims stemming from that particular incident. Therefore, businesses can strategize their risk management better, knowing the extent of their coverage for any single occurrence.

The other choices do not convey the specificity of the Per Occurrence Limit, as they either address aspects of multiple incidents or the overall annual limits instead of focusing on the maximum payout for a single incident. Understanding this limit is vital for both insurance providers and policyholders to ensure appropriate coverage levels are maintained.