Per-Occurrence Limit
Also known as: Per-Claim Limit, Per-Incident Limit
Standard small-business GL is $1M per-occurrence. Combined with the Aggregate Limit (which caps total annual claims), determines maximum payout.
Real-world scenario
Riverside Roofing LLC, a 14-employee residential and light-commercial roofer in Tennessee, buys a general liability policy with a $1,000,000 per-occurrence limit and a $2,000,000 aggregate limit for an annual premium of $8,400, subject to a $2,500 property-damage deductible. The per-occurrence limit is the most the insurer will pay for all bodily injury and property damage arising from any single accident, no matter how many people are hurt.
Mid-season, a stack of unsecured bundles slides off a second-story roof and strikes a homeowner and a passing pedestrian. The homeowner suffers a fractured pelvis with $410,000 in medical bills and $130,000 in lost wages; the pedestrian's injuries add $100,000. Falling debris also destroys a parked car and a porch, producing $220,000 in property damage. Because the carrier owes a duty to defend, it also spends $95,000 on attorneys and experts. The bodily-injury claims total $640,000, the property damage adds $220,000, and defense runs another $95,000 — a combined $955,000.
Since this was one occurrence, the entire event is capped at the single $1,000,000 per-occurrence limit. The insurer pays $857,500 in settlements — the $860,000 in damages net of the $2,500 deductible Riverside absorbs on the property portion — and, because defense sits outside the limit here, covers the $95,000 in defense on top. The $857,500 in indemnity fits comfortably under the $1,000,000 cap, but it draws the shared aggregate down to roughly $1,142,500 for the rest of the term. When a later slip-and-fall claim settles for $180,000, the owner is glad he added a $5,000,000 umbrella for just $3,200 a year.
How it affects your premium
The per-occurrence limit you select is one of the biggest levers on a liability premium, but several other factors determine what that limit costs:
- Limit amount chosen: Moving from a $1,000,000 to a $2,000,000 per-occurrence limit typically adds 15-40% to the base premium, though the marginal cost per dollar of coverage falls as limits rise.
- Relationship to the aggregate limit: A common 1M/2M structure lets the aggregate absorb two full-limit losses; requesting a higher aggregate multiple raises the price.
- Class of business and hazard grade: Roofers, framers, and other high-severity trades pay far more for the same limit than a bookkeeper because a single occurrence can produce catastrophic bodily injury.
- Defense treatment: Whether defense costs sit inside or outside the limit matters — defense inside vs. outside limits erodes the per-occurrence cap when inside, changing both exposure and rate.
- Deductible or self-insured retention: Taking a larger per-claim retention lowers premium by shifting the first dollars of every occurrence back to you.
- Prior loss history: A pattern of large single-event claims signals severity and pushes the rate for high per-occurrence limits upward.
- Exposure basis: Payroll, sales, or square footage scale the premium, so the same limit costs more as the business grows.
Common misconceptions
Myth: The per-occurrence limit is the most my policy will ever pay in a year.
Reality: No — the per-occurrence limit caps a single event, while the aggregate limit caps total payouts for the whole policy term, and it is usually two or more times the per-occurrence figure.
Myth: A per-occurrence limit resets to full value after each claim automatically.
Reality: Each occurrence can draw up to the per-occurrence limit, but every paid loss also erodes the shared aggregate; once the aggregate is exhausted, no per-occurrence capacity remains until renewal.
Myth: Per-occurrence and combined single limit mean the same thing.
Reality: A combined single limit is one auto-policy structure blending bodily injury and property damage, while a per-occurrence limit is the per-event cap in a liability policy — related concepts, but not interchangeable.
Myth: If ten people are hurt in one accident, I get the per-occurrence limit ten times.
Reality: All injuries and damages traceable to a single occurrence share one per-occurrence limit, no matter how many claimants are involved.
Frequently asked questions
What is a per-occurrence limit?
How is the per-occurrence limit different from the aggregate limit?
Does a per-occurrence limit apply separately to each claimant?
How much per-occurrence coverage should a small business carry?
Do defense costs count against my per-occurrence limit?
Sources cited
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