What is an incorrect description of what most liability policies cover on an occurrence basis?

Liability policies that operate on an occurrence basis are designed to provide coverage for incidents that occur during the policy period, even if a claim is filed after the policy has expired. The correct choice highlights that liability coverage does not extend indefinitely without a time limit.

Most occurrence-based policies will cover incidents that happen within the effective dates specified in the policy, meaning that the coverage is generally confined to events occurring during that defined time frame. Once the policy period concludes, a new policy needs to be in place to cover any subsequent occurrences.

The first choice is accurate as it indicates that any occurrence during the policy period is covered, irrespective of when the claim is actually filed or established. The second choice reflects a common aspect of liability policies where a maximum payment limit (or limit of insurance) is specified. The third option correctly states that the insurance applies to all occurrences during the policy period, which reinforces the nature of occurrence policies.

Thus, the indefinite extension of coverage without a time limit is not characteristic of these policies, making this the inaccurate description of liability coverage on an occurrence basis.