What does the term insurer's liability refer to?

The term insurer’s liability specifically refers to the legal obligation of the insurer to pay claims that arise under the terms of an insurance policy. This obligation arises when a policyholder experiences a loss covered by their insurance policy, triggering the insurer's responsibility to compensate for that loss. This concept is fundamental to insurance, as it encapsulates the promise made by the insurer to the insured, establishing the basis of trust in the insurance relationship.

Other terms presented in the question relate to different aspects of insurance but do not define insurer's liability. For instance, the amount an insurer earns from premiums is more about revenue generation than liability. Financial reserves pertain to the funds set aside by insurers to meet future claims and operational requirements, while the total number of claims an insurer can cover relates to the insurer's capacity and risk management rather than the legal obligations tied to individual policies. Thus, the correct understanding of insurer's liability is critical in the context of claims handling and regulatory compliance within the insurance industry.