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Per-occurrence limit

The per-occurrence limit is the most your insurance company will pay for a single covered loss 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 liability insurance policies.

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 multiple claims during the policy period.

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, your policy must be active both when the incident occurred and when you made the claim.

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