Per Occurrence and Aggregate Limits Explained
Per occurrence is the most a policy pays for one incident. The aggregate is the most it pays for everything in the policy year. This guide shows how the two work together and how to read them on any policy or certificate.
What per occurrence means
An occurrence is a single incident, or a run of repeated exposure to the same harmful condition, that causes injury or damage. The each-occurrence limit is the ceiling on what the policy pays toward that one incident, no matter how many people are hurt or how many claims grow out of it. A ceiling fire that damages three neighboring suites is one occurrence, and all three claims share one occurrence limit.
The number does not shrink from one incident to the next. If a second, unrelated incident happens a month later, it gets its own occurrence limit, as long as the aggregate still has room. That second condition is where most of the confusion starts.
What the aggregate caps
The aggregate is the total the policy pays for all covered losses during one policy period, usually a year. IRMI describes the general aggregate on a standard commercial general liability form as the annual maximum for covered bodily injury, property damage and personal and advertising injury, outside the products and completed operations exposure, which has its own aggregate. Once paid losses use up the aggregate, the policy pays nothing more for those categories until it renews.
The aggregate resets at renewal. It does not refill in the middle of a term, so a business that has already had a large claim this year is carrying less protection than its certificate suggests. When a big loss lands mid-year, ask whether the remaining aggregate still meets what your leases and contracts require.
A worked example
Take a bakery with a general liability policy written at $1,000,000 each occurrence and $2,000,000 general aggregate. In March, a customer slips on a wet floor and the claim settles for $600,000. In July, a delivery driver is injured on the loading step and that claim settles for $900,000. Each claim fits under the $1,000,000 occurrence limit, and together they have used $1,500,000 of the aggregate.
In October, a third claim settles for $700,000. It is still under the occurrence limit, but only $500,000 of the aggregate is left, so the policy pays $500,000 and the bakery owes the remaining $200,000 itself. A commercial umbrella scheduled over the general liability policy would typically pick up that gap, which is one of the main reasons umbrellas exist.
The other limits on a general liability policy
A general liability declarations page lists several numbers, and each one caps something different:
- Each occurrence: the most paid for one incident across bodily injury and property damage.
- General aggregate: the yearly total for everything except products and completed operations.
- Products-completed operations aggregate: a separate yearly total for injury or damage caused by your products after they leave your hands, or by work you have finished. Product sellers lean on this one most.
- Personal and advertising injury: the cap for claims such as libel, slander or using someone else’s advertising idea, applied per person or organization.
- Damage to premises rented to you: a smaller limit for fire and similar damage to the space you rent.
- Medical expense: a small per-person amount that pays a visitor’s medical bills regardless of fault.
These sub-limits sit inside the occurrence and aggregate limits rather than adding to them. The insurance terms guide defines the rest of the declarations-page vocabulary.
How limits read on other policies
Other lines use the same idea with different labels:
- Commercial auto: liability is written either as one combined single limit per accident or as split limits, with separate caps for bodily injury per person, bodily injury per accident and property damage. Auto liability normally has no annual aggregate, so every accident gets a fresh limit.
- Workers’ compensation: the benefits owed to injured employees under state law have no dollar limit on the policy. The employers liability part shows three numbers instead: each accident, disease for the policy, and disease for each employee.
- Professional liability: usually written per claim and in the aggregate. IRMI notes that defense costs often count against the limit on these policies, so legal fees can wear down the amount left to pay a settlement.
- Umbrella: one occurrence limit and one aggregate that sit above the underlying policies, and the umbrella’s aggregate applies where the underlying coverage has one.
Reading limits on a certificate
On a standard ACORD 25 certificate of insurance, the limits column for general liability lists each occurrence, damage to rented premises, medical expense, personal and advertising injury, general aggregate and products-completed operations aggregate. Shorthand such as “$1M/$2M” means $1,000,000 each occurrence and $2,000,000 general aggregate. The box beside the aggregate also shows whether it applies per policy, per project or per location.
A certificate shows the limits as written at the start of the term. It does not show claims already paid this year, so a client reading it cannot tell how much of the aggregate is left. That is why contracts that care about the remaining amount sometimes ask for a per-project or per-location aggregate instead. The Amazon certificate guide walks through a filled-in sample box by box.
Choosing limits that hold up
Start from what your contracts and leases require, then ask whether one bad year could use up the aggregate. A business with many locations, many projects or a product line sold nationwide carries more incidents per year than a single office, and the aggregate is what runs out first. Per-project or per-location aggregates, a higher aggregate on its own, or an umbrella are the usual ways to add headroom.
For help choosing the starting number, see how much general liability insurance you need. When a contract asks for limits you do not carry, send it to us before you sign and we will show you the options that meet it.
A few useful answers
Common questions
What does $1,000,000 per occurrence mean on an insurance policy?
It means the policy pays up to $1,000,000 toward any single incident, however many claims come out of it. Separate incidents each get their own $1,000,000, until the annual aggregate is used up.
Does the aggregate limit go back to full after a large claim?
Not during the policy term. The aggregate resets when the policy renews for a new period. If a large claim has used much of it, ask us about an umbrella or added limits to cover the rest of the term.
Is products-completed operations part of the general aggregate?
No. On a standard commercial general liability policy it has its own aggregate, so product and finished-work claims draw from a separate yearly total.
Why does my certificate list a per-project aggregate?
A per-project or per-location aggregate gives each job or address its own yearly total. Clients and landlords request it so another job’s claims cannot use up the protection meant for theirs.
Does commercial auto insurance have an aggregate limit?
Auto liability is normally written per accident with no annual aggregate. Each accident gets the full limit, whether that is a combined single limit or split limits.