Per Occurrence Limit

Example

“The restaurant's general liability policy has a $2 million per occurrence limit, so if food poisoning affects 50 customers in one incident, the maximum coverage for all related claims is $2 million total.”

Memory Tip

Think 'Per Occurrence = Per Accident' - no matter how big the single accident, you're capped at this limit for that one event.

Why It Matters

Understanding per occurrence limits helps individuals and businesses assess whether their coverage is adequate for potential large-scale incidents they might cause. This limit determines the maximum protection available for single events, which could involve multiple victims and significant damages requiring substantial financial protection.

Common Misconception

Many people confuse per occurrence limits with aggregate limits, thinking the per occurrence amount resets after each claim, when actually it's the maximum for each single incident regardless of how many claims result. Some also think having multiple policies automatically increases the per occurrence limit, but coordination of coverage rules may apply.

In Practice

ABC Delivery has a $1 million per occurrence liability limit. Their driver runs a red light and causes a five-car accident injuring eight people. Medical bills total $400,000, property damage reaches $200,000, and pain and suffering settlements add $800,000, for total damages of $1.4 million. The insurance company pays the $1 million per occurrence limit, leaving ABC responsible for the remaining $400,000 out of pocket.

Etymology

The term developed from insurance terminology combining 'per' (for each), 'occurrence' (single event), and 'limit' (maximum amount). It became standard in liability insurance as policies evolved to distinguish between single-event and total policy limits in the early-to-mid 20th century.

Common Misspellings

Related Terms

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See Also