What do per occurrence and aggregate limits mean on a CGL policy? These are the two numbers that set the outer edge of what a commercial general liability (CGL) policy is designed to pay, and mixing them up is a common way business owners misjudge how much protection actually remains after a claim.
A CGL policy's declarations page usually lists more than one liability figure, and each does a different job. This article looks at what a per occurrence limit and an aggregate limit are, how the two interact over a single policy term, and where a business is likely to run into them in practice, whether that is signing a commercial lease, bidding on a contract, or sitting down for a policy renewal.
What Are Per Occurrence and Aggregate Limits on a CGL Policy?
A per occurrence limit is generally the most a CGL policy is designed to pay for a single claim or incident, regardless of how legal fees, investigation costs, and a settlement add up on that one event. An aggregate limit is the total ceiling on what the same policy is designed to pay across every claim during one policy term, usually 12 months. Once claims paid during the term reach the aggregate limit, no further amount typically remains available under that policy until it renews, regardless of how much room was left under the per occurrence limit for any single claim.
How the Two Limits Work Together
Per occurrence and aggregate limits are not two separate policies stacked on top of each other. They are two ceilings drawn on the same pool of coverage, and a claim can draw against both at once.
| Limit type | What it generally caps | When it resets |
|---|---|---|
| Per occurrence | The amount payable for one claim or incident | A fresh ceiling typically applies to the next claim |
| Aggregate | The total payable across all claims in the term | Typically resets at renewal, not after each claim |
Say a business carries a $2 million per occurrence limit and a $5 million aggregate limit. A single large claim could use up to $2 million of that coverage on its own. Three separate $2 million claims within the same policy term, however, would use the full $5 million aggregate well before a fourth claim could be paid, even though no single one of those claims exceeded the per occurrence figure. The numbers here are illustrative; the limits that actually apply to a given business are set out in its own policy wording.
What Can Reduce an Aggregate Limit During a Policy Term
An aggregate limit does not need one catastrophic loss to run low. It is generally designed to erode with every claim paid during the term, whether that comes from one significant event or a string of smaller ones. A business with several claims in the same year, even modest ones, may find that less room remains under the aggregate than expected the next time something happens. This is one reason insurers look closely at claims history at renewal, and why many businesses bring their claims pattern to a licensed broker as a discussion point before the next term begins.
How Contracts and Leases Commonly Set These Limits
Many businesses do not choose a per occurrence or aggregate figure entirely on their own. A commercial lease, a municipal tender, or a client contract often specifies a minimum CGL limit before work can start, commonly $1 million or $2 million per occurrence with a matching or higher aggregate. Insurance for contractors frequently addresses this directly, since contractors bidding on public or commercial work tend to see aggregate requirements written straight into tender documents. A government body or general contractor wants assurance that the policy backing the bid is not already stretched thin by other jobs running at the same time. A landlord may separately ask a tenant to list a per occurrence figure on a certificate of insurance, since that number is the one that matters most for a single incident on the leased premises.
When a Business Might Look at Umbrella Coverage
When a business's aggregate limit consistently feels tight for its size or industry, umbrella or excess liability insurance for a business is one way available limits can be extended without necessarily raising the CGL policy's own numbers. That kind of coverage generally sits above the CGL policy's per occurrence and aggregate limits and is designed to respond once those are used up on a covered claim, subject to its own terms and conditions. Whether a business's CGL limits alone are enough, or whether excess coverage makes sense, is a question that depends on contracts, industry, and claims history rather than a single rule of thumb.
Benefits of Understanding Per Occurrence and Aggregate Limits
Knowing how these two limits work helps a business ask sharper questions when comparing quotes, rather than judging a policy by a single limit number in isolation. It also explains why remaining protection under the same policy can look different partway through a term than it did at the start, after a busier-than-usual claims year. For a business whose contracts increasingly specify insurance minimums, understanding the difference between CGL and professional liability insurance alongside the difference between per occurrence and aggregate makes it easier to read exactly what a client or landlord is asking for. Coverage decisions still belong with a licensed broker and the specific policy wording, but a business that understands the mechanics is better positioned to have that conversation.
Where You'll Come Across These Limits
These limits show up long before any claim is filed. A landlord or property manager often checks a certificate of insurance before handing over keys, and the per occurrence figure is frequently the number a lease calls out by name. A contractor bidding on a municipal or commercial contract may see both a per occurrence and an aggregate minimum written into the tender package, alongside broader business insurance in Canada requirements tied to the contract itself. An annual policy renewal is another common touchpoint, since a broker and insurer typically revisit whether the current limits still fit a business's size, revenue, and claims history for the year ahead.
Talk to a Licensed Broker About CGL Limits
Per occurrence and aggregate limits work together to set the outer edge of a CGL policy, but the right numbers for a specific business depend on its contracts, its industry, and its claims history, none of which a general article can weigh for an individual case. A licensed broker can review a business's current limits against what its contracts require and help put together a commercial insurance quote that reflects how the business actually operates.
Coverage details vary by insurer and by policy, and only the wording of an actual policy and a licensed broker can confirm what applies to a specific situation.