What is true regarding an aggregate limit in an insurance policy?

The correct choice indicates that an aggregate limit applies to losses from all occurrences within a specified policy period. This concept is crucial in understanding how various types of insurance policies function, especially liability policies. An aggregate limit sets a maximum cap on the total amount the insurer will pay for all covered losses during a specific period, usually one year.

This means that if multiple claims arise within that period, the aggregate limit represents the total sum available for all these claims combined. Once the aggregate limit is reached, no further claims can be paid until the policy renews and the limit resets. This feature helps insurers manage their risk by limiting the total payout over time while still providing coverage for multiple occurrences.

In distinguishing this from the other concepts presented: the option referring to a single occurrence addresses limits specific to individual events, which do not encompass the broader scope of multiple claims. The lifetime limit on claims represents a separate concept that pertains to the entirety of the policy rather than a specific time frame. The option about resetting annually regardless of claims suggests a misunderstanding of how the aggregate limit functions, as it is triggered by the passage of time and the accumulation of losses, not just a simple annual reset.