Per Occurrence vs Aggregate Limit
Every Commercial General Liability declaration page lists at least two limits — often shown as "$1M/$2M" or "$2M/$4M." The first is the Per Occurrence limit, the second is the Aggregate. Most business owners never get a clear explanation of which is which or why both matter.
Plain-English: Per Occurrence = max the policy pays out for any one claim event. Aggregate = total max the policy pays across the entire policy year, no matter how many claims. Once Aggregate exhausts, the policy stops responding — even if Per Occurrence has remaining capacity on each claim.
Side-by-side
| Dimension | Per Occurrence | Aggregate |
|---|---|---|
| What it caps | One claim event. A single incident — slip and fall, bodily injury, property damage — triggers the Per Occurrence limit. If your limit is $1M and the claim settles for $1.2M, the policy pays $1M and you pay the rest. |
All claims in the policy year combined. Even if no individual claim exceeds Per Occurrence, total payouts can't exceed Aggregate. After Aggregate exhausts, the policy is "burned out" until renewal. |
| Typical ratio | Most GL policies set Aggregate = 2x Per Occurrence (the $1M/$2M, $2M/$4M, $5M/$10M pattern). Some carriers offer 3x or 5x ratios; some allow Aggregate equal to Per Occurrence (less common). |
Aggregate is typically the larger number. The "/$2M" in "$1M/$2M" means the policy pays at most $2M total across the entire year, regardless of how many claims pierce Per Occurrence. |
| Which one carriers focus on at quote | Per Occurrence is what landlords, prime contractors, and lenders typically demand in contract minimums. "Carry $1M GL" almost always means "Per Occurrence $1M." |
Aggregate is what carrier underwriters focus on internally. Industry exposure × estimated claims frequency × severity = expected aggregate burn. They set premium against Aggregate, not Per Occurrence. |
| Products-Completed Operations Aggregate | Per Occurrence applies to both ongoing-operations claims and completed-operations claims uniformly. One limit, one trigger per claim event. |
There are often TWO Aggregates. General Aggregate (ongoing operations) and Products-Completed Operations Aggregate. A contractor can exhaust one without touching the other — your declarations page should show both. Reinstatement is possible on some forms. |
| What happens after exhaustion | Per Occurrence resets on every new claim. A $2M claim today doesn't reduce capacity for a $1M claim tomorrow — each claim event has its own Per Occurrence cap. |
Once Aggregate exhausts, the policy stops paying — even for new claim events that would individually fit under Per Occurrence. Burn-out is permanent until policy renewal. This is the case for Excess/Umbrella coverage. See Excess vs Umbrella. |
| How umbrellas interact | Umbrella sits over Per Occurrence on each underlying claim event. If your GL Per Occurrence is $1M and your umbrella is $5M, the umbrella adds $5M of capacity per claim event. |
Umbrella also sits over Aggregate. If GL Aggregate exhausts and a new claim hits, the umbrella may or may not drop down depending on the umbrella's terms. Read your umbrella declarations: "Reinstatement" and "Drop-down" provisions control behavior. |
Bottom line
For most small commercial businesses, the right baseline is $1M Per Occurrence / $2M Aggregate. This satisfies the vast majority of landlord, lender, and prime-contractor contract minimums.
Consider higher Aggregate (or umbrella stacking) if:
- You have high claims frequency (events, high-traffic retail, food service)
- One claim pierces, leaving little Aggregate capacity for the rest of the policy year
- Contracts require "Aggregate $4M+" specifically (rare but happens)
- You have Products-Completed exposure (contractors, manufacturers) — verify P-COA limits on your dec page
Watch the "Each Occurrence" vs "General Aggregate" vs "Products-Completed Operations Aggregate" rows on your declarations — three separate numbers, three separate caps.
Related guides
Sources cited
- Aggregate limit — International Risk Management Institute (IRMI), 2024
- Each occurrence limit — International Risk Management Institute (IRMI), 2024
- Products-completed operations aggregate limit — International Risk Management Institute (IRMI), 2024