What is the difference between per-occurrence and aggregate liability limits?

Commercial liability policies have two key limit structures that apartment owners need to understand. The per-occurrence limit is the maximum amount the insurer will pay for any single claim or incident. The general aggregate limit is the maximum total the insurer will pay for all covered claims during the entire policy period (usually one year). These limit structures are defined in the standard ISO CGL policy form (CG 00 01), Section III – Limits of Insurance.

A common limit structure for apartment general liability policies is $1,000,000 per occurrence with a $2,000,000 general aggregate. This means the insurer will pay up to $1,000,000 for any single claim and up to $2,000,000 for all claims combined during the policy year. If two separate $1,000,000 claims occur in the same policy year, the aggregate is exhausted and no further coverage is available for the remainder of the year.

For apartment owners with multiple properties, some policies offer a per-location aggregate rather than a policy-wide aggregate. This structure is available through the ISO Designation of Premises endorsement (CG 25 04), which means each property has its own aggregate limit, so claims at one property do not erode the available coverage at another. This structure provides better protection for portfolio owners. Fannie Mae's Multifamily Selling and Servicing Guide (Part III, Chapter 6) requires per-location aggregates on DUS loans to ensure that each financed property has its own dedicated aggregate limit.

When selecting limits, apartment owners should consider the potential severity of claims at their property, including catastrophic scenarios like a building fire with injuries, a drowning at a pool, or a serious negligent security claim. The umbrella policy provides an additional layer above these limits for claims that exceed the primary policy limits.