Each and every loss

"Each and every loss" is a basis on which a limit, excess or deductible applies separately to each individual loss or claim, rather than collectively across all losses in the policy period.

Definition §

"Each and every loss" denotes a structural basis on which a particular policy figure — typically a limit, a sub-limit, an excess or a deductible — applies to each individual loss separately. It is the opposite of an "aggregate" or "annual aggregate" basis, where the figure applies cumulatively across all losses in the policy period. ^[1]

The phrase is used in two principal contexts. The first is in respect of limits and sub-limits: an "each and every loss" limit caps the insurer's exposure on each individual loss, with no reduction caused by previous payments under the policy. The second is in respect of excesses and deductibles: an "each and every loss" excess applies separately to each loss, with the insured retaining the excess amount on every claim. ^[2]

In both cases the key question is how the policy defines what counts as a single loss for these purposes. Where the policy contains an aggregation clause, two losses that would otherwise be separate may be deemed a single loss for limit and excess purposes if the aggregation trigger is engaged. The "each and every loss" wording does not in itself define what a loss is — it simply applies the figure in question to each loss as defined elsewhere in the wording. ^[3]

Legal / Regulatory basis §

There is no statutory definition of "each and every loss" in English insurance law. The concept is one of policy drafting and its meaning depends on the wording of the contract and the policy's own definitions of "loss" and "claim".

The Marine Insurance Act 1906 includes the concept of a "particular average" loss as distinct from a "general average" loss, but this terminology is specific to marine insurance and predates the modern "each and every loss" formula used in non-marine wordings. ^[4]

The case law on aggregation, although mostly concerned with the connecting factors that determine whether multiple claims become one, also indirectly addresses each and every loss wording. The House of Lords in Axa Reinsurance (UK) plc v Field [1996] 1 WLR 1026 distinguished between events and causes; whether an "each and every loss" basis applies separately to each incident depends in part on the same distinction. Lloyds TSB v Lloyds Bank Group Insurance [2003] UKHL 48 and AIG Europe Ltd v Woodman [2017] UKSC 18 elaborate on the unifying-factor analysis that ultimately controls how often the each and every loss figure bites. ^[5]

The Insurance Act 2015 provides the general principles applicable to construction of liability policies. ^[6]

The Court of Appeal in Spire Healthcare Ltd v Royal & Sun Alliance Insurance plc [2022] EWCA Civ 17 considered the operation of limits in the context of healthcare claims, and the decision is a useful reminder that the precise wording controls. ^[7]

How it works in practice §

In practice the each and every loss wording governs the cadence at which the policy responds to a sequence of incidents.

Where an excess is on an each and every loss basis, the insured retains the excess amount on every claim. A firm with a £25,000 each and every loss excess that suffers ten claims in a year retains £250,000 across the year. By contrast, an excess on an aggregate basis would be retained once across the period, after which insurer indemnity engages for all subsequent claims.

Where a limit is on an each and every loss basis, the insurer's per-claim exposure is preserved on each new claim, subject to any aggregation. A £5,000,000 each and every loss limit means £5,000,000 is available for claim one, another £5,000,000 for claim two, and so on, until the aggregate limit (if any) is exhausted.

The interaction with the aggregation clause is the most important practical point. The each and every loss wording on its own does not stop the aggregation clause from collapsing multiple losses into a single loss. If the aggregation clause engages — for example because the losses share a single originating cause — what would otherwise be ten "each and every losses" become one each and every loss, attracting one limit and one excess. This is the principal source of disputed aggregation work in claims practice. ^[8]

Each and every loss wording is also relevant to reinstatement provisions. A policy with each and every loss limits and no aggregate may operate in a manner functionally similar to an automatically reinstating cover, although the legal mechanism differs.

Common variations §

The most common variation distinguishes between "each and every loss" and "each and every loss and in the aggregate". The former applies per loss with no period cap; the latter applies per loss but also feeds an aggregate cap on the insurer's total exposure across the period.

Some wordings distinguish "each and every claim" from "each and every loss". The two are usually interchangeable in liability contexts but in property contexts a "loss" may be the underlying damage and a "claim" the formal request for indemnity. The wording must be read carefully where the two terms are used together.

Reinsurance wordings sometimes use "each and every loss occurrence", with "loss occurrence" then defined to capture the unifying factor (single event, single originating cause, hours clause and so on). This combination of wording produces a clean mapping between the underlying event and the reinsurance response.

Some policies operate excesses on different bases for different heads of cover — for example, an each and every loss excess for damages claims and an aggregate excess for defence costs. The structure must be set out clearly to avoid disputes over how the excess is consumed.

Example §

A consulting engineer holds professional indemnity insurance with illustrative limits of £2,000,000 each and every loss and £4,000,000 in the aggregate, with a £20,000 each and every loss excess.

During the policy period the engineer notifies three unconnected claims arising from three different projects. The first settles for £600,000, the second for £1,400,000 and the third for £900,000. For each claim the engineer pays a £20,000 excess (£60,000 in total) and the insurer pays the balance, subject to the £2,000,000 each and every loss limit. The total insurer payment is £2,820,000, well within the £4,000,000 aggregate.

If the policy had been written with a single aggregate excess of £20,000 rather than each and every loss excess, the engineer would have retained only £20,000 across the three claims, with the insurer meeting the remainder.

Conversely, if the three claims had been bundled into a single claim by the aggregation clause (for example because they all arose from a single defective software tool used on all three projects), the engineer would have paid a single £20,000 excess and the insurer's indemnity would have been capped at the single £2,000,000 each and every loss limit, potentially leaving a significant uninsured shortfall.

These figures are illustrative; the actual position depends on the wording and the facts.

See also §

• /wiki/aggregate-limit/ — the contrasting basis
• /wiki/per-claim-limit/ — closely related concept
• /wiki/aggregation-clause/ — the mechanism that decides how many losses there are
• /wiki/excess-insurance/ — what the insured retains per loss
• /wiki/deductible/ — variant terminology
• /wiki/professional-indemnity-insurance/ — the line of business
• /wiki/public-liability-insurance/ — another common context

References §

1. ↑ Insurance Act 2015 — https://www.legislation.gov.uk/ukpga/2015/4
2. ↑ Marine Insurance Act 1906 — https://www.legislation.gov.uk/ukpga/Edw7/6/41
3. ↑ Axa Reinsurance (UK) plc v Field [1996] 1 WLR 1026 (HL)
4. ↑ Lloyds TSB General Insurance Holdings Ltd v Lloyds Bank Group Insurance Co Ltd [2003] UKHL 48 — https://publications.parliament.uk/pa/ld200203/ldjudgmt/jd031106/lloyds-1.htm
5. ↑ AIG Europe Ltd v Woodman [2017] UKSC 18 — https://www.supremecourt.uk/cases/uksc-2016-0033.html
6. ↑ Spire Healthcare Ltd v Royal & Sun Alliance Insurance plc [2022] EWCA Civ 17 — https://www.bailii.org/ew/cases/EWCA/Civ/2022/17.html