Each and every claim: reading the limit basis on your schedule

Start with the schedule, not the wording

Almost everything a firm needs to know about its limit basis is on one line of the schedule. It will say a figure, then a phrase — “any one claim”, “each and every claim”, “in the aggregate”, or a combination such as “each and every claim, aggregate for pollution”. Read that line first. Then check the defence costs line immediately beneath it, because the two together determine what is genuinely available to pay a settlement.

Firms often assume they know their basis because it was quoted years ago. Bases move at renewal, particularly when a market hardens, and they move quietly — a schedule can change from each and every to aggregate without a covering note drawing attention to it. It is a five-second check that is worth doing every year.

How each basis behaves across a year

Take a firm with a limit of indemnity written on an each-and-every-claim basis. Three unrelated claims are notified in the same period. In principle, each has the full limit available to it. The insurer’s total exposure across the year is unbounded by the limit itself, which is why this basis is the more expensive and the more sought-after.

Now take the same three claims under an aggregate limit. The first substantial settlement erodes the limit; the second draws on what is left; the third may find little or nothing. The limit is a pot for the period, not a ceiling per claim. For a firm with a high volume of small matters, or one exposed to a systemic error repeated across many clients, an aggregate basis can be consumed far faster than intuition suggests.

There is a third pattern worth naming: an each-and-every-claim limit with an inner aggregate for named perils. Pollution, asbestos, dishonesty of employees, and sometimes cyber or data-related exposures are frequently capped in the aggregate even where the main limit is not. If your firm’s realistic worst case sits inside one of those carve-outs, the headline basis is telling you less than you think.

The word doing the heavy lifting is “claim”

An each-and-every-claim limit is not an each-and-every-mistake limit. Whether two allegations count as one claim or two is settled by the policy’s aggregation language, not by common sense. Wordings link matters together using formulas such as a series of claims arising from one act, one originating cause, one source, or one event — and these phrases have been litigated because they behave very differently in practice.

The effect cuts both ways. Aggregation can be a benefit: many small related claims aggregate into one claim, so one excess is paid rather than fifty. It can also be a serious limitation: fifty related claims aggregated into one claim share one limit. Our entries on aggregation and the aggregation clause set out how the common formulas work.

Costs inclusive or costs in addition

Defence costs on a professional indemnity claim are frequently substantial, and in disputed technical matters they can rival or exceed the damages. Two treatments are common in the UK market.

Costs in addition. Defence costs sit outside the limit, so the whole limit remains available for damages and settlement. This is the stronger position and is what most professionals assume they have.

Costs inclusive. Defence costs erode the limit. A vigorously defended claim can consume a meaningful share of the limit before any settlement is reached, and the firm funds the difference. Some wordings soften this by applying a proportion, or by making costs inclusive only above a threshold.

The basis and the costs treatment interact. An each-and-every-claim limit with costs in addition is a genuinely different product from an aggregate limit with costs inclusive, even where the headline figure printed on the schedule is identical.

Reinstatement

Where a limit can be exhausted — an aggregate limit, or an inner aggregate on a carved-out section — the question is whether it can be restored. Some policies offer one reinstatement, occasionally more, either automatically or on payment of an additional premium; many offer none. Reinstatement provisions typically carry their own conditions about when they apply and to which sections.

For firms whose regulator or clients require a minimum limit to be maintained, this is not a technicality. An exhausted aggregate limit with no reinstatement can put a firm in breach of contractual or regulatory obligations mid-year, at exactly the moment it is least attractive to the market.

Which basis a firm should buy

There is no universal answer, but the questions are consistent. How many separate client relationships could generate a claim in one year? Is there a single methodology, template, calculation or piece of advice repeated across many clients — the classic systemic exposure? Do your appointments specify a basis, and does the wording of that requirement actually match your schedule? What does your claims history look like in frequency terms, not just severity?

Where an each-and-every-claim basis is unavailable or disproportionately priced, the practical alternatives are a higher aggregate limit, an excess layer, or a negotiated carve-out for the specific exposure that drives the concern. All three are worth pricing before accepting an aggregate limit that was set by default. Our limit-sizing framework takes the decision step by step.

Frequently asked questions

What does “each and every claim” mean on a PI schedule?

It means the limit of indemnity applies separately to each qualifying claim, so a second claim in the same policy year in principle has the full limit available to it. An aggregate limit, by contrast, is a single pot for the whole period: once it is eroded by settlements and, where applicable, defence costs, what remains is all that is left for later claims.

Can several allegations be treated as one claim?

Yes. The policy’s aggregation language decides it, using formulas such as a series of claims arising from one act, one originating cause, one source or one event. That can help — one excess instead of many — or hurt, by making many related claims share a single limit. It is worth checking which formula your wording uses.

Are defence costs inside or outside the limit?

It depends on the wording. Costs in addition means defence costs sit outside the limit and do not reduce what is available for damages; costs inclusive means they erode it. On a technically defended claim the difference can be material, so the costs line should be read alongside the limit basis rather than separately.

Can an exhausted PI limit be reinstated?

Sometimes. Some policies provide one or more reinstatements, automatically or for an additional premium, and many provide none at all. Where a firm must maintain a minimum limit under its appointments or its regulator’s rules, an aggregate limit without reinstatement is a governance issue as well as an insurance one.

This page is general insurance information about how UK professional indemnity policies are commonly structured. It is not legal advice, and it is not a statement of what any particular policy covers. If a claim, a circumstance or a contract term is in issue, read your own wording and take advice on your own facts.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.