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📋 '''Per claim limit''' is the maximum amount an [[Definition:Insurance carrier | insurer]] will pay for any single [[Definition:Claim | claim]] under an [[Definition:Insurance policy | insurance policy]]. It represents one of the fundamental boundaries of coverage and is distinct from the [[Definition:Aggregate limit | aggregate limit]], which caps total payments across all claims during the policy period. Per claim limits are a defining feature of [[Definition:Liability insurance | liability]] policies — including [[Definition:Professional liability insurance | professional liability]], [[Definition:Directors and officers liability insurance (D&O) | D&O]], [[Definition:Errors and omissions insurance (E&O) | E&O]], and [[Definition:Medical malpractice insurance | medical malpractice]] — but they also appear in [[Definition:Property insurance | property]], [[Definition:Cyber insurance | cyber]], and various specialty lines.

⚙️ When a covered claim arises, the insurer's obligation is capped at the per claim limit regardless of the actual loss amount. If a professional liability policy carries a per claim limit of $5 million and the insured faces a judgment of $8 million, the insurer pays $5 million and the insured bears the remaining $3 million (absent any [[Definition:Excess insurance | excess]] layer). Importantly, the definition of what constitutes a single "claim" is governed by the policy's [[Definition:Claim aggregation clause | claim aggregation]] or "related claims" language — multiple lawsuits stemming from the same act, error, or series of related acts may be treated as one claim for limit purposes, which can work either for or against the insured depending on the circumstances. In [[Definition:Reinsurance | reinsurance]], per claim limits surface in [[Definition:Per risk excess of loss | per risk]] and [[Definition:Per occurrence excess of loss | per occurrence excess of loss]] structures, where the reinsurer's liability for any one claim or event is similarly bounded.

💡 Setting the appropriate per claim limit is one of the most important decisions in policy design and [[Definition:Underwriting | underwriting]]. Too low a limit leaves the policyholder dangerously exposed to severe losses; too high a limit inflates [[Definition:Premium | premium]] costs and concentrates risk on the insurer's balance sheet. [[Definition:Insurance broker | Brokers]] and [[Definition:Risk manager | risk managers]] evaluate per claim limits in the context of the insured's specific exposure profile, industry benchmarks, and the interplay with other policy features such as [[Definition:Deductible | deductibles]], [[Definition:Self-insured retention (SIR) | self-insured retentions]], and umbrella or excess towers. From a regulatory and [[Definition:Loss reserving | reserving]] standpoint, per claim limits help actuaries model severity distributions and estimate [[Definition:Incurred but not reported (IBNR) | IBNR]] reserves, since they truncate the insurer's exposure at a known ceiling for any individual loss event.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Aggregate limit]]
* [[Definition:Policy limit]]
* [[Definition:Self-insured retention (SIR)]]
* [[Definition:Excess insurance]]
* [[Definition:Deductible]]
* [[Definition:Claim aggregation clause]]
{{Div col end}}

Definition:Per claim limit - Revision history

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