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📋 '''Per-claim limit''' is the maximum amount an [[Definition:Insurance carrier | insurance carrier]] will pay for any single [[Definition:Claim | claim]] under a given [[Definition:Policy | policy]]. It functions as one of the key boundaries of [[Definition:Coverage | coverage]], sitting alongside the [[Definition:Aggregate limit | aggregate limit]] — which caps total payouts across all claims during the policy period — to define the insurer's financial commitment. Per-claim limits are especially prominent in [[Definition:Liability insurance | liability]] lines such as [[Definition:Professional liability insurance | professional liability]], [[Definition:Directors and officers liability insurance (D&O) | D&O]], and [[Definition:Errors and omissions insurance (E&O) | E&O]], where the cost of a single event can vary dramatically.

⚙️ When an [[Definition:Insured | insured]] reports a covered loss, the [[Definition:Claims adjuster | adjuster]] evaluates the total [[Definition:Indemnity | indemnity]] and [[Definition:Defense costs | defense costs]] attributable to that claim. If the combined amount exceeds the per-claim limit, the insurer's obligation stops at the stated ceiling and the insured bears the excess. In many [[Definition:Claims-made policy | claims-made]] policies, defense costs erode the per-claim limit — meaning legal fees reduce the dollars available for settlement or judgment — unless the policy specifies that defense costs sit outside the limit. How a policy defines and groups a "claim" also matters: related or interrelated wrongful acts may be treated as a single claim, collapsing multiple allegations under one limit rather than allowing each to draw its own.

💡 Selecting the right per-claim limit is a core part of the [[Definition:Underwriting | underwriting]] and [[Definition:Risk management | risk management]] conversation. An insured with high-severity, low-frequency exposure — such as a hospital facing [[Definition:Medical malpractice insurance | medical malpractice]] suits — may prioritize a robust per-claim limit over a higher aggregate. [[Definition:Broker | Brokers]] often layer [[Definition:Excess insurance | excess]] or [[Definition:Umbrella insurance | umbrella]] coverage above the per-claim limit of the primary policy to protect against catastrophic single-event losses. For carriers, setting this limit accurately reflects their appetite for individual-loss volatility and directly influences [[Definition:Premium | premium]] pricing and [[Definition:Reinsurance | reinsurance]] cession strategies.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Aggregate limit]]
* [[Definition:Policy limit]]
* [[Definition:Defense costs]]
* [[Definition:Claims-made policy]]
* [[Definition:Self-insured retention (SIR)]]
* [[Definition:Excess insurance]]
{{Div col end}}

Definition:Per-claim limit - Revision history

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