insurance

Per Occurrence Limit

The maximum amount an insurance company will pay for all claims arising from a single incident or event. This limit applies regardless of how many people are injured or how much property is damaged in that one occurrence.

Example

“After the restaurant fire injured twelve customers, the business owner's liability policy paid the full $2 million per occurrence limit, even though total damages exceeded $3 million.”

Memory Tip

Think 'ONE event = ONE limit' - no matter how big the incident gets, there's still just one maximum payout per occurrence.

Why It Matters

Per occurrence limits determine your maximum financial protection for any single disaster or accident, making them crucial for understanding your true coverage. If damages exceed this limit, you're personally responsible for the difference, which could result in significant financial hardship or bankruptcy.

Common Misconception

People often confuse per occurrence limits with annual aggregate limits, thinking they can use the full limit multiple times per year. In reality, each separate incident has its own limit, but once that limit is reached for an occurrence, no additional coverage applies to that specific event, regardless of other policy limits.

In Practice

Maria's auto policy has a $300,000 per occurrence limit when she causes a multi-car accident injuring four people. Person A has $80,000 in medical bills, Person B has $90,000, Person C has $75,000, and Person D has $100,000. The total damages of $345,000 exceed her per occurrence limit, so her insurance pays only $300,000, leaving Maria personally liable for the remaining $45,000.

Etymology

From Latin 'per' meaning 'for each' and 'occurrere' meaning 'to happen or meet,' combined with 'limit' from Latin 'limes' meaning 'boundary.'

Common Misspellings

per occurence limitper occurance limitper occurrance limitper-occurence limit

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