Limit of indemnity per occurrence
What it means
The limit of indemnity for any one occurrence is the most an insurer will pay for a single event. It is the headline figure on a liability policy and the one licences, contracts and site requirements normally specify.
An occurrence is defined in the wording, and the definition does the real work. Several claims arising from one cause can be treated as a single occurrence and share one limit, which is why the definition is worth reading before anyone relies on the headline figure.
Also called: occurrence limit, limit of indemnity, per occurrence limit, any one claim
Where you meet it
- Licence conditions that require a class of liability cover with a stated minimum.
- Contract insurance clauses specifying the cover a contractor must hold before starting.
- Certificates of currency, where it is usually the only monetary figure shown.
Worked example
A contract requires public liability cover at a stated minimum limit for any one occurrence. The contractor’s certificate shows a lower limit.
The gap is a compliance failure whether or not a claim is ever made, and the fix is either an increase to the policy limit or a variation agreed with the principal. Increasing a limit mid-term is usually straightforward and is priced as an adjustment.
What goes wrong with it
- A per-occurrence limit and an annual aggregate are different constraints. Some covers, notably products liability, carry both.
- Defence costs may sit inside the limit or outside it depending on the wording, and that changes how much is actually available to pay a claim.
- The limit applies to all insureds together where a policy names several, including any principal added by extension.
- Licence conditions and contract clauses are set independently of each other. Meeting the licence minimum says nothing about whether a contract’s figure is met, and the higher of the two is the one to hold.
- Raising a limit part way through a period does not apply retrospectively. An event that has already happened is dealt with under the limit that was in force at the time.
Covers this clause appears in
- Public liability insurance — Cover for legal liability to third parties for personal injury or property damage arising from business activities.
Related clauses
Guides that use this
Sources
On any specific policy, the wording and the schedule govern — they are the primary source for what a clause means there. The references below are general guidance to check against, cited at the publisher level.
- Moneysmart (ASIC) — General guidance on business insurance from the regulator’s consumer site. A starting point, not a definition of this clause.