Understanding the Limits on a Commercial General Liability Policy
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If you are having problems understanding the limits on your general liability policy, don’t worry, you’re not alone. We have had plenty of people walk into our offices with no idea as to what their limits actually were. So, to prevent further confusion we decided we would break down a few of those limits for you. But first! A brief description of what commercial general liability policy limits you should be aware of.

When one looks at the declarations page of a commercial general liability policy (CGL) , one normally sees six different limits of insurance listed.  It’s not uncommon for the holder of such a policy to be confused about how much coverage he actually has. Listed below are the six different limits.

The 6 Limits on a Commercial General Liability Policy

  1. Medical Expense Limit

A commercial general liability policy will (most of the time) include Medical Payments Coverage.  This coverage pays the medical expenses of many non-employees injured on the Named Insured’s premises or during the Named Insured’s operations.  Coverage applies whether or not the Named Insured is at fault for the injury.  The limit applies per injured person, and is often $5,000 or $10,000, although some companies include higher limits.

  1. Damage to Premises Rented to You Limit

This limit is sometimes referred to by its former name, Fire Damage Legal Liability Limit.  It is the most that will be paid for covered damage to a premises rented by an insured.  For all but the shortest rentals (7 days or less), coverage applies only to damage by fire.  Limits of $100,000 are common, although some companies include higher limits.

  1. Each Occurrence Limit

This is, for most purposes, the most important limit on the policy.  It is the most that will be paid for one occurrence of bodily injury or property damage, in other words, one accident.  The limit is shared by all Insureds involved in the loss, and applies regardless of the number of people injured or bringing suit.  If the claim also involves Medical Payments or Damage to Premises Rented to You coverage, those limits are part of the Each Occurrence limit, not paid in addition to it. Most insurers offer limits up to $1,000,000, although $2,000,000 policies are becoming more common.

  1. Personal and Advertising Injury Limit

This limit is the most that will be paid under the Personal and Advertising Injury Coverage for damages sustained by one person or organization.  This coverage applies to such offenses as libel and slander and is commonly written with a limit equal to the Each Occurrence limit.

  1. General Aggregate

This limit is the most that will be paid annually for all claims other than Products and Completed Operations claims.  Often the General Aggregate limit is written at two times the Each Occurrence limit.   In addition, it is not uncommon and is highly recommended to add an endorsement to the policy that provides for a separate General Aggregate for each covered location or for each project being worked on.

  1. Products-Completed Operations Aggregate

This limit is the most that will be paid annually for bodily injury and property damage claims that involve Products Liability or Completed Operations Liability. As was the case with the General Aggregate, this limit is often written at two times the Each Occurrence limit.

Understanding how the six commercial general liability limits apply is key in determining whether adequate protection is available for a covered loss.





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