Insurance policy limits are the maximum dollar amounts an insurer will pay for covered claims under a policy. Limits define the ceiling of protection - once a limit is reached, the insurer has no further obligation for claims against that limit, and the insured (or other parties) absorb any excess loss.
Insurance policy limits are the maximum dollar amounts an insurer will pay for covered claims - once reached, the insurer has no further obligation, and the insured absorbs any excess loss.
Contractual insurance requirements are fundamentally about limits: does the vendor carry enough coverage to make the risk transfer meaningful? A vendor with $100,000 in general liability coverage offers far less protection than one carrying $1 million, regardless of what other terms the policy contains. Verifying limits on a certificate of insurance is the most common compliance task in third-party risk management.
The Types of Limits That Appear in Contracts
Contracts specify limits in several forms, and each must be understood and verified separately.
Per occurrence limit. The maximum the insurer will pay for any single occurrence - a single event or accident that results in claims. A per occurrence limit of $1,000,000 means no single event produces more than $1,000,000 in insurance payments, regardless of how many people are injured or how much property is damaged in that event.
General aggregate limit. The maximum the insurer will pay for all covered claims during the entire policy period. If the aggregate is $2,000,000 and multiple claims consume that amount, no additional claims are covered until the next policy period begins.
Products/completed operations aggregate. A separate aggregate that applies specifically to claims arising from the named insured's products or completed work. This is distinct from the general aggregate and is particularly relevant in construction contracts where completed operations coverage matters.
Personal and advertising injury limit. A per-occurrence limit for claims arising from libel, slander, copyright infringement, and similar non-physical harms.
Medical payments limit. A per-person limit for no-fault medical payments to injured third parties.
Damage to rented premises limit. The maximum payable for fire damage to premises the insured rents. Relevant for commercial tenants.
How Limits Are Structured in Practice
A standard general liability policy might carry limits of $1,000,000 per occurrence / $2,000,000 general aggregate. This means:
- Any single event can generate at most $1,000,000 in insurer payments
- All events combined during the year can generate at most $2,000,000
If a contract requires $2,000,000 per occurrence, neither a $1M / $2M primary policy alone nor an argument that the aggregate is "adequate" satisfies the requirement. The per-occurrence limit must equal or exceed the per-occurrence requirement.
An umbrella or excess liability policy can supplement primary limits to achieve higher per-occurrence and aggregate coverage. When reviewing for compliance, the total available coverage across all layers must be calculated.
How Limits Appear on a COI
On an ACORD 25 form, limits are displayed in a grid format for each coverage type. For commercial general liability, the standard columns include:
- Each occurrence
- General aggregate
- Products / completed operations aggregate
- Personal and advertising injury
- Damage to rented premises
- Medical expense
Each figure should be compared against the specific contractual requirement for that coverage type. It is not sufficient to confirm that some limits meet requirements - each limit must be individually verified.
Common Limit-Related Compliance Issues
Per occurrence limit below contract requirement. The aggregate may be adequate, but the per-occurrence limit fails the test. This is common when vendors carry standard $1M / $2M limits and contracts require $2M / $4M.
General aggregate shared across projects. Some contracts require per-project aggregate limits, meaning the aggregate applies separately to each project rather than being shared across all of the vendor's work during the year. Without a per-project aggregate endorsement, the aggregate is shared - and can be consumed by claims on other projects, leaving you with reduced protection.
Limits partially consumed by prior claims. COIs show policy limits as issued, not remaining limits. If a $2M aggregate has been partially consumed by a prior claim, only the remainder is available - but the COI still shows $2,000,000.
Umbrella limits not sufficient to reach required total. The contract requires $5M total. The primary is $1M and the umbrella is $3M - only $4M total. The compliance shortfall is not obvious if you only check each policy separately.
Limits for the wrong coverage line. A contract may specify $1M in professional liability, and the vendor submits a $1M CGL policy. The limits are the same number, but they apply to different coverage types.
What to Check When Reviewing a COI for Limits
- Compare each limit field on the COI to the corresponding limit in the contract requirements
- Add primary and umbrella/excess limits to determine total available capacity where required
- Confirm aggregate limits on appropriate lines (general, products/completed ops) meet requirements separately
- If the contract requires per-project aggregates, confirm the endorsement is noted
How Bramble Helps
Bramble reads the limit requirements from your contracts and compares them against the limit fields on submitted COIs - per occurrence, aggregate, and by coverage line - flagging every shortfall automatically. No more manual spreadsheet comparison across dozens of vendors and coverage lines.
Visit getbramble.com to see how Bramble handles contract-vs-COI compliance at scale.