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10.5 Section III – Limits of Insurance

The limits of insurance shown on the Declarations page represent the most the insurer will pay under the policy. These limits apply regardless of the number of insureds, claims made, suits brought, or persons or organizations making claims or bringing suits. The policy limits apply separately to each consecutive annual period of the policy. This means that if the policy is written for more than one year, the limits apply separately to each annual policy period.

Aggregate Limits​

A Commercial General Liability (CGL) policy includes two aggregate limits. An aggregate limit is the most the insurer will pay for certain types of claims during the policy period. The General Aggregate Limit is the most the insurer will pay during the policy period for the combined total of:

  • Damages under Coverage A, except damages included in the products-completed operations hazard;
  • Damages under Coverage B; and
  • Medical expenses under Coverage C.

The Products-Completed Operations Aggregate Limit is the most the insurer will pay during the policy period for damages under Coverage A that are included in the products-completed operations hazard. This limit applies separately from the General Aggregate Limit and is used for claims arising from the insured’s products or completed work.

If the insured has a Claims-Made CGL policy with a Supplemental Extended Reporting Period (SERP) Endorsement, separate supplemental aggregate limits apply to claims first received and recorded during the SERP. These limits are:

  • The Supplemental General Aggregate Limit, which is equal to the General Aggregate Limit shown in the Declarations; and
  • The Supplemental Products-Completed Operations Aggregate Limit, which is equal to the Products-Completed Operations Aggregate Limit shown in the Declarations.

These supplemental limits apply only to qualifying claims first made and recorded during the Supplemental Extended Reporting Period.

Other Applicable Limits​

Each Occurrence Limits​

The Each Occurrence Limit is the most the insurer will pay for the combined total of damages under Coverage A and medical expenses under Coverage C arising from any one occurrence. This limit applies when bodily injury or property damage results from a single covered event. Payments made under the Each Occurrence Limit reduce the applicable aggregate limit for that type of loss. The Each Occurrence Limit also includes two sublimits that are subject to it.

The Damage To Premises Rented To You Limit is the most the insurer will pay under Coverage A for property damage to premises rented to the insured. This limit is usually written as a per premises limit, although some insurers may write it as a per fire limit. This limit is a sublimit of the Each Occurrence Limit, meaning it is included within the Each Occurrence Limit rather than added to it. Payments made under this limit also reduce the General Aggregate Limit. For fire damage, this limit applies not only to premises rented to the insured, but also to premises temporarily occupied by the insured with the owner’s permission.

The Medical Expense Limit is a sublimit within the Each Occurrence Limit. It is the most the insurer will pay under Coverage C for medical expenses resulting from bodily injury sustained by any one person. This limit is generally small compared to the liability limits under Coverage A. The standard Medical Expense Limit is typically $5,000 per person.

An Insurance Story

The Furniture Company’s CGL policy includes a Medical Expense Limit of $5,000 per person, an Each Occurrence Limit of $1,000,000, a General Aggregate Limit of $3,000,000, and a Products-Completed Operations Aggregate Limit of $2,000,000.

During the policy period, a customer is injured on the company’s premises. The policy pays $3,000 in medical expenses under Coverage C. Because this payment falls under the Medical Expense Limit, it is also subject to the Each Occurrence Limit. The payment reduces the General Aggregate Limit by $3,000, leaving $2,997,000 available for future claims subject to that aggregate.

Later in the same policy period, a product-related occurrence results in damages of $1,500,000. Because the damages arise from a products-completed operations hazard, the claim is subject to the Products-Completed Operations Aggregate Limit. However, the most the insurer will pay for any one occurrence is the Each Occurrence Limit of $1,000,000.

The insurer pays $1,000,000 for the product-related occurrence. This payment reduces the Products-Completed Operations Aggregate Limit from $2,000,000 to $1,000,000. The General Aggregate Limit is not reduced by this products-completed operations loss. The remaining $500,000 owed to the claimant would be the responsibility of The Furniture Company.

Personal and Advertising Injury Limit​

The Personal and Advertising Injury Limit is the most the insurer will pay under Coverage B for the total amount of damages arising from personal and advertising injury sustained by any one person or organization. This limit applies separately to each person or organization that sustains covered personal and advertising injury.