Glossary of Business Insurance Terms
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Per-occurrence limit

The per-occurrence limit is the most your insurance company will pay for a single covered incident under the terms of your policy.

What is a per-occurrence limit?

Many small business insurance policies limit the amount of money they’ll pay for a single incident. This amount or cap is known as a per-occurrence limit.

Third-party liability policies (policies that cover lawsuits from people outside your business) usually have a per-occurrence limit. That includes general liability insurance and cyber insurance policies.

One incident could result in multiple claims, which would still fall under the per-occurrence limit provided they were all caused by the same event.

Why are per-occurrence limits necessary?

Per-occurrence limits are necessary for two reasons:

  • They give you flexibility in tailoring the right amount of protection for your business’s risk exposures.
  • They help insurers limit their total liabilities and claims expenses so they can remain financially strong.

How does a per-occurrence limit differ from an aggregate limit?

The aggregate limit is the maximum amount of money an insurer will pay you for all incidents and claims during the policy period. The policy period is typically one year.

How does a per-occurrence policy differ from a claims-made policy?

In short, claims-made policies must be active when an incident is reported to collect on a claim. But if you have an occurrence policy, you can collect on a claim even after your policy expires if the incident occurred while you were covered.

An occurrence policy such as general liability insurance covers losses that take place during a specific coverage period, regardless of when the claim occurs. To collect on a claims-made policy like errors and omissions insurance (E&O), your policy must be active both when the incident occurred and when you made the claim.

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Updated: March 14, 2024
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