Most professional liability dec pages show two limits, not one, and the difference between them is easy to miss until it matters. One number governs a single claim. The other governs your entire year. Reading both, plus one detail about defense costs, tells you how much protection you actually have.
The per-claim limit
The per-claim limit generally caps what the policy will pay for any single claim. If a client brings one lawsuit, this is the ceiling for that matter, covering the settlement or judgment and, depending on the policy, the defense. It is the number most owners think of as their coverage. But it only describes one claim at a time. It says nothing about what happens if a second claim shows up before the first is resolved.
The aggregate limit
The aggregate limit generally caps what the policy will pay for all claims combined during the policy period, usually a year. Think of it as the tank behind the per-claim limit. Every claim draws from the same tank. A policy might allow a healthy amount per claim while holding a total for the year that only a couple of serious claims could reach. When the aggregate is gone, the policy generally has nothing left to pay for the rest of that period, even if the per-claim limit looked generous.
How the two interact
The per-claim limit is the most any one claim can draw. The aggregate is the most the whole year can draw. In a quiet year with a single modest claim, the difference never surfaces. In a hard year with several claims, the aggregate becomes the number that matters, because each claim chips away at the shared total. A firm that could realistically face more than one claim in a year should look as hard at the aggregate as at the per-claim figure.
The defense cost detail
Here is the part that changes everything. On many E&O policies, defense costs are paid from the same limit as any settlement. Lawyers are expensive, and a case that drags on can consume a real share of the limit before a dollar of settlement is paid. That means your effective protection for a settlement is the limit minus whatever the defense already spent. Some policies keep defense outside the limit, which preserves the full amount for settlement. Which structure you have is one of the most important things on the page, and it is easy to overlook.
Which one fits
You do not choose one limit over the other. They come as a pair, and the real decision is how high to set each and whether to pay for defense outside the limit. A firm that faces occasional single claims can focus on a per-claim limit that meets its contracts. A firm exposed to several claims in a bad year, or to long, costly defenses, benefits from a higher aggregate and, where available, defense costs that sit outside the limit. Client contracts often set a floor for both. Above that floor, the right numbers follow your real exposure, not the cheapest quote.
Questions to ask your advisor
- What are my per-claim and aggregate limits, and how far apart are they?
- Do defense costs come out of my limit or sit outside it?
- Could my firm plausibly face more than one claim in a single policy year?
- Do my client contracts require a specific per-claim or aggregate limit?
- If a long defense ate into the limit, how much would be left for a settlement?
The two numbers on your dec page tell a fuller story than the headline figure alone. The per-claim limit caps a single claim. The aggregate caps the year. And on many policies, defense costs quietly erode both. Reading all three together is how you know whether the protection you are paying for would still be there on a bad day.
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