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🛡️ '''Per occurrence limit''' is the maximum amount an [[Definition:Insurance carrier | insurer]] will pay for all [[Definition:Claims | claims]] arising from a single covered [[Definition:Occurrence | occurrence]] or event under an [[Definition:Insurance policy | insurance policy]]. It functions as a fundamental cap on the insurer's exposure to any one loss event, regardless of how many individual claimants or damaged properties are involved. The concept is most prevalent in [[Definition:Property and casualty insurance | property and casualty]] lines — including [[Definition:General liability insurance | general liability]], [[Definition:Commercial property insurance | commercial property]], and [[Definition:Professional liability insurance | professional liability]] — and is a critical structuring element in both [[Definition:Primary insurance | primary]] and [[Definition:Excess insurance | excess]] layers of coverage.

📝 In a typical [[Definition:Commercial general liability (CGL) | commercial general liability]] policy, the per occurrence limit sits alongside an [[Definition:Aggregate limit | aggregate limit]] that caps total payouts across all occurrences during the policy period. If a factory explosion injures dozens of workers and damages neighboring properties, all resulting claims from that single event draw against the per occurrence limit. The precise definition of what constitutes a single occurrence is often the most litigated aspect of insurance contracts, since the answer determines whether multiple loss events are aggregated under one limit or treated separately — with significant financial consequences. Policy language, case law, and regulatory guidance vary substantially across jurisdictions: U.S. courts have developed competing "cause" and "effect" tests, while the [[Definition:Lloyd's | Lloyd's]] market and UK courts have their own body of precedent. Selecting the appropriate per occurrence limit is a core task of [[Definition:Underwriting | underwriting]] and [[Definition:Risk management | risk management]], informed by exposure analysis, [[Definition:Catastrophe modeling | catastrophe modeling]], and the insured's loss history.

⚖️ Getting the per occurrence limit right has cascading effects across the insurance value chain. For the insured, too low a limit creates a gap that could result in devastating uninsured losses; too high a limit means paying for capacity that may never be needed. For insurers and [[Definition:Reinsurance | reinsurers]], per occurrence limits define the maximum [[Definition:Probable maximum loss (PML) | probable maximum loss]] per event and drive [[Definition:Reinsurance program | reinsurance program]] design — particularly the attachment points and limits of [[Definition:Per-occurrence reinsurance | per-occurrence reinsurance]] treaties. The interplay between per occurrence and [[Definition:Aggregate limit | aggregate limits]] also shapes [[Definition:Capital management | capital management]] decisions, as regulators and [[Definition:Credit rating agency | rating agencies]] evaluate an insurer's net exposure to large single events when assessing [[Definition:Solvency | solvency]] and [[Definition:Financial strength rating | financial strength]].

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Aggregate limit]]
* [[Definition:Occurrence]]
* [[Definition:Per-occurrence reinsurance]]
* [[Definition:Probable maximum loss (PML)]]
* [[Definition:Excess insurance]]
* [[Definition:Policy limit]]
{{Div col end}}

Definition:Per occurrence limit - Revision history

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