Commercial general liability insurance policies have several different limits of liability that define how much the policy will pay in the event of covered claims. The limits of liability are reflected on the declarations page of the policy and are agreed to at the time the policy is written by the insurance company.
Per Occurrence Limit
The general liability policy defines an occurrence as an incident or a series of related incidents giving rise to a claim or a series of related claims. A single limit of liability applies to an occurrence and is the maximum the policy will pay on behalf of the insured to third parties who are injured or whose property is damaged. The per-occurrence limit applies regardless of the number of parties to a claim so long as they all arise from one occurrence.
General Aggregate Limit
The general aggregate limit is the maximum amount a policy will pay regardless of the number of occurrences. The aggregate limit is commonly either the same as the per-occurrence limit or is sometimes double the per-occurrence limit. Since the mid-1980s when the standard general liability insurance policy form was completely revised, policies have contained an aggregate policy limit. Prior to the revision, policies would potentially pay for an unlimited number of occurrences.
Personal & Advertising Injury Limit
The standard per-occurrence limit applies to bodily injury and property damage to third parties. General liability policies also apply to offenses that do not cause physical injury but can still harm others. The personal and advertising injury limit provides coverage for such offenses and is frequently in a limit matching the per-occurrence limit that applies to bodily injury and property damage. This coverage is optional and may not always be elected by insureds, which is why it carries a limit separate from the standard per-occurrence limit.
Products/Completed Operations Aggregate
General liability policies may also include a limit for bodily injury or property damage arising out of completed work, which is covered by the separate products/completed operations limit of liability. The standard per-occurrence limit applies to ongoing operations, which would exclude claims arising out of prior work or products. For many insureds such as those in the manufacturing industry, this is a significant risk exposure.
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