For business auto liability coverage, how is the limit of liability applied?

The limit of liability for business auto liability coverage is generally applied for each separate accident. This means that if an incident occurs resulting in a liability claim, the coverage limit will apply to that specific event, regardless of how many claims might arise during the policy period.

This approach ensures that each accident can be covered up to the specified liability limit, providing financial protection for each unique incident. Since multiple accidents can occur during a policy term, having the limit applied per accident prevents the depletion of the total liability limit across various claims, ensuring that coverage remains available for future incidents.

In contrast, the other options refer to different applications of liability limits that do not typically align with standard business auto liability policies. For instance, applying limits per vehicle insured would not account for the overall liability arising from a single accident, while annual cumulative or maximum per policy period applications would limit the coverage in ways that do not accurately reflect how liability is structured in this context.