What is the significance of the 'Per Occurrence Limit' in a CGL policy?

The 'Per Occurrence Limit' in a Commercial General Liability (CGL) policy is significant because it establishes the maximum amount that the insurance company will pay for all claims arising from a single event or incident. This limit defines the extent of the insurer's liability for each occurrence, whether that occurrence involves bodily injury or property damage.

A key aspect of this limit is that it ensures policyholders understand the financial protections provided for each event, which can help in risk management and decision-making processes. For instance, if a business faces multiple claims resulting from a single incident, such as a fire that damages various properties and causes injuries, the per occurrence limit caps the total amount payable for that incident. This prevents excessive losses beyond what the insured has planned or budgeted for in terms of potential claims from a single event.

It's essential for policyholders to analyze and understand this limit as it directly impacts their coverage in the case of large, singular occurrences. Each claim related to a different event would then be subject to its own per occurrence limit, ensuring that financial liabilities are managed appropriately.