Most small businesses land on a general liability policy with $1 million per occurrence and $2 million aggregate. About 91% of Insureon's small business customers choose exactly those limits, according to the broker's published data, and they've become the default starting point in most commercial leases and client contracts.
Default doesn't mean right for every business. Some operations need more. Some can work with less. And many business owners don't fully understand what those two numbers mean until a claim tests them. This guide explains how GL limits work, what drives the right number for your business, and when the standard limits are genuinely enough versus when they're leaving you exposed.
What Per Occurrence and Aggregate Actually Mean
Before picking a limit, it helps to be clear on what the two numbers control.
Per occurrence limit is the maximum your insurer will pay for all bodily injury and property damage arising from any single incident, no matter how many people file claims from it. If your policy carries a $1 million per occurrence limit and a customer wins a $1.4 million judgment against you, your insurer pays $1 million. You pay the remaining $400,000.
General aggregate limit is the most your insurer will pay during the policy period, typically one year, for premises and operations claims, personal and advertising injury, and medical payments combined. With a $2 million aggregate, if you have three separate premises claims totalling $2.3 million in one year, your insurer pays $2 million. The remaining $300,000 is yours.
The two limits work together. A $1 million per occurrence limit and $2 million aggregate means you're covered for up to $1 million on any one incident, and up to $2 million across those incidents in the year. Once the general aggregate is exhausted, the policy stops paying on that bucket for the rest of the policy period regardless of how many claims remain.
One additional limit worth understanding: the products-completed operations aggregate. This is a separate, additional aggregate for claims arising from your products or completed work, not from your ongoing operations. It typically matches the general aggregate, so a standard policy is really $1 million per occurrence with two $2 million aggregates. Contractors can usually also add a per-project or per-location aggregate endorsement so one job's claims don't drain the aggregate for every other job.
The Standard Starting Point: $1M / $2M
The $1 million per occurrence and $2 million aggregate combination is the market standard for a reason. It satisfies the minimum requirements in most commercial leases, vendor contracts, and client agreements. It's the threshold at which most landlords will hand over keys and most procurement teams will approve a supplier.
The Insurance Information Institute notes that commercial general liability insurance can be purchased as a standalone policy, as part of a business owner's policy (BOP), or through a commercial package policy. In a separate guide, the III describes a BOP as bundling property, liability, and business interruption coverage for smaller companies, with some higher-risk businesses such as restaurants sometimes ineligible.
For most office-based businesses, consultants, small retailers, and low-footfall service providers, $1M / $2M is the usual starting point. The risk profile is moderate, claims are uncommon, and the limits comfortably exceed what most incidents in those categories generate.
When $1M / $2M Isn't Enough
The standard limits fall short in two situations: high-risk industries and contract requirements above the standard.
High-risk industries. Construction, roofing, electrical, plumbing, and food service all carry elevated risk of serious bodily injury. A single fall from height or a kitchen fire can generate claims well into seven figures. For these trades, $2 million per occurrence and $4 million aggregate in total capacity is a more appropriate baseline, and some projects require it as a contract condition before work begins.
Contract requirements above the standard. Government contracts, large commercial clients, and enterprise procurement teams routinely require limits higher than $1M / $2M as a condition of doing business. A contract that requires $2M per occurrence and $5M aggregate is typically met by a $1M / $2M primary policy plus an umbrella, but that has to be arranged before the bid, not after. Discovering the gap after you've submitted the bid costs you the contract.
High-value advisory work. If a single error in your advice or project management could cause a client millions in losses, that exposure is a professional liability (E&O) question, not a GL limits question. GL responds to bodily injury and property damage. It does not respond to financial loss from your professional work, and raising your GL limit won't touch it.
Suggested starting points by business type:
| Business type | Total per occurrence | Total aggregate |
|---|---|---|
| Office-based professionals, consultants | $1M | $2M |
| Retail and hospitality | $1M | $2M |
| Cleaning and janitorial | $1M | $2M |
| Light manufacturing, product businesses | $1M to $2M | $2M to $4M |
| Construction and trades (general) | $2M | $4M |
| Roofing, electrical, structural work | $2M | $4M |
| Food service and restaurants | $1M to $2M | $2M to $4M |
| Government or enterprise contracts | Per contract terms | Per contract terms |
Primary GL for trades is usually written at $1M / $2M. The higher figures are typically reached with an umbrella or excess policy, and construction contracts also commonly require a per-project aggregate endorsement.
The Five Factors That Drive Your Number
Beyond industry, five factors should inform where you set your limits.
1. Contract requirements. Start here, not with industry averages. The highest minimum required by any active contract or lease is your floor. Everything else is a judgment call above that floor.
2. Revenue and scale. A larger operation handles more clients, more transactions, and more foot traffic. More activity means more claim exposure over a policy period, which makes the aggregate limit more likely to be tested.
3. Physical risk in your work. Businesses where people can get seriously hurt need more limit than those where the realistic claim is a sprained ankle or a broken laptop. Think about what the worst plausible incident at your operation would cost to defend and settle.
4. Products liability. If you manufacture or sell physical products, the products-completed operations component of your GL policy is particularly relevant. Product liability claims can be large and numerous, especially if a defective product affects multiple customers.
5. Location. Jury verdicts and settlement values vary significantly by state. Texas is now one of the country's leading nuclear-verdict states, alongside California, Florida, Georgia, and New York. Harris County and San Antonio juries each returned verdicts above $600 million in 2025. If your operations are concentrated in Texas or other high-verdict states, your limits should reflect that.
When to Add a Commercial Umbrella Policy
If your risk profile exceeds what $1M / $2M GL limits can absorb, but the jump to higher primary limits is disproportionately expensive or simply not offered, a commercial umbrella policy is usually the more efficient solution.
An umbrella policy sits above your primary GL (and typically your auto and employers liability policies) and responds when a claim exhausts the underlying limit. A $5 million umbrella over a $1M / $2M GL policy gives you $6 million in total per occurrence capacity, usually at a lower cost per million than the primary layer, and most GL carriers won't write per occurrence limits that high on a primary policy in the first place.
For businesses in construction, hospitality, or any industry where a single catastrophic incident could generate an eight-figure claim, an umbrella is not optional protection. It's the mechanism that keeps a large loss from becoming an unrecoverable one.
Getting the Limit Right the First Time
The right GL limit is the one that covers your realistic worst-case claim, satisfies the highest requirement in your active contracts and leases, and gives you headroom if the aggregate takes multiple hits in a single year. For most businesses, $1M / $2M gets there. For higher-risk operations or those pursuing enterprise contracts, it doesn't. Either way, it's worth reviewing your general liability coverage against your contracts and exposure before a bid or a claim forces the question.
This guide is general information, not a coverage determination. What your policy covers is governed by its own terms, conditions, and exclusions.