What it means
On a general liability policy, the each occurrence limit caps what the insurer pays for bodily injury and property damage from one occurrence. An occurrence is generally an accident, including continuous or repeated exposure to substantially the same harmful conditions.
Payments for each occurrence also count against the relevant aggregate. A policy with a 1,000,000 each occurrence limit and a 2,000,000 general aggregate could pay two full occurrence limits before the aggregate is exhausted.
Separate sublimits, such as damage to premises rented to you and medical expense, sit within the policy and are often much lower. Contracts usually focus on the each occurrence and aggregate figures.
An example
A scaffold collapse at a job run by Northgate Masonry injures three workers from other trades. All three claims arise from one occurrence, so Northgate’s 1,000,000 each occurrence limit is the most its general liability policy will pay for the event. Its umbrella can respond above that.
Names in this example are fictional.
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Is 1,000,000 per occurrence enough?
It is a common contract minimum, not a universal answer. Many small businesses carry 1,000,000 per occurrence and 2,000,000 aggregate, then add an umbrella when contracts or risks call for more. The right limit depends on contract requirements, the work performed and the potential size of a serious claim.
Are defense costs part of the each occurrence limit?
On standard ISO general liability forms, defense costs are generally paid in addition to limits. Some policies, especially certain nonstandard forms and many professional liability policies, include defense within the limit, which means legal fees reduce the money left for settlements. Check the policy wording before relying on either approach.
General information only. It is not legal or insurance advice. Only issued policy documents and endorsements describe actual coverage.