In Plain English
Quick Answer
The most your insurance pays for any single incident.
Definition
Definition
The per occurrence limit is the maximum amount an insurer will pay for any single covered event or claim under a liability policy, regardless of the number of claimants involved. This limit resets with each separate occurrence during the policy period, subject to the overall general aggregate limit. For example, a policy with a $1 million per occurrence limit and a $2 million aggregate will pay up to $1 million per event but no more than $2 million total in a policy year.
Context
Why It Matters in Bidding
The per occurrence limit determines whether a contractor's liability coverage is adequate for the projects it bids, and owners' insurance requirements in the bid documents often specify minimum per-occurrence and aggregate amounts. Estimators reviewing insurance specs must confirm the firm's policy meets those minimums, since failing to carry required limits can render a bid non-responsive or trigger costly mid-project coverage upgrades.
Example
Example
Reviewing the front-end documents, an estimator confirms the firm's $1 million per-occurrence and $2 million aggregate limits satisfy the owner's insurance requirements before submitting the bid.
See Also
Related Terms
FAQ
Questions Contractors Ask
What is the difference between a per-occurrence limit and an aggregate limit?
The per-occurrence limit caps what the insurer pays for any single event, while the aggregate limit caps total payouts during the entire policy period across all occurrences. A policy might pay the full per-occurrence amount on one claim yet exhaust the aggregate after several claims, leaving later losses uncovered.
How much per-occurrence coverage do construction contracts usually require?
Required limits are set by the owner in the bid or contract documents and vary by project size and risk. Larger or higher-risk projects often demand higher per-occurrence and aggregate limits, sometimes supplemented by excess or umbrella coverage. Always read the insurance exhibit and match limits before bidding.
Does the per-occurrence limit reset for each claim?
Yes, the per-occurrence limit applies fresh to each separate covered event, but only up to the policy's overall aggregate limit. Once cumulative payouts reach the aggregate, no further coverage remains for that policy period even if individual occurrences fall within the per-occurrence cap, which is why aggregate adequacy matters too.
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