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Commercial general liability deconstructed

By July 9, 2018 July 16th, 2018 Insurance

Business owners have all heard the term general liability and most have a general knowledge of what this insurance covers. In this blog I will break down what general liability covers (by definition). General liability is designed to cover the costs of a legal defense and pay damages if a company is found liable. This coverage is extra important to understand when liability lawsuits are so frequent.

Your insurance agent may mention a per occurrence limit or an aggregate limit, they may appear on paper in the following form:

EACH OCCURRENCE
$1,000,000

DAMAGED TO RENTED PREMISES
$300,000

MED EXP (ANY ONE PERSON)
$5,000

PERSONAL & ADV INJURY
$1,000,000

GENERAL AGGREGATE
$2,000,000

PRODUCTS-COMP/OP AGG
$2,000,000

What do these limits MEAN?

The limit for each occurrence, coverage is also considered coverage A: Bodily injury and property damage (BI/PD). The coverage pays out on one single event, in this case
$1,000,000. The aggregate.

DAMAGED TO RENTED PREMISES covers a premise rented to you if you are found liable for the damage.

The next coverage MED EXP (ANY ONE PERSON) Coverage C: Medical payments is an interesting coverage that pays medical expenses to a third party up to the limit regardless of fault, the reasoning behind this is that people are less likely to sue if their medical expenses are paid without a lengthy process. If the third party sues after the medical is paid the business is still covered up to the policy limits.
PERSONAL & ADV INJURY Coverage B: Personal and advertising injury is one of the few coverages that covers intentional acts, libel and slander to name two examples.

GENERAL AGGREGATE is the policy limit of liability for the policy term.

PRODUCTS-COMP/OP AGG refers to the completion of products and completed operations, this is especially important for manufacturers and contractors.

For a claim to be covered under PRODUCTS-COMP/OP AGG coverage the bodily injury or property damage must result from a product or operation of the insured.