There are so many limits on a General Liability policy, it can be confusing to understand how they interact. This post will give examples of GL claims in action.

For an example of how GL aggregates work, consider these limits and settled claims in a single policy term for a manufacturer, Best Knives:

$1,000,000   Each Occurrence
$2,000,000  General Aggregate
$2,000,000  Products – Completed Operations Aggregate
$300,000      Damage to Premises Rented to You
$5,000           Medical Payments

1. During a company event, Maris accidentally trips Frazier, a presenter. Frazier goes to the ER for x-rays, but only has a few bruises. The insurer reimburses Frazier $365 for the cost of the ER visit. This is paid from Medical Payments limit, and is subject to General Aggregate limit.
2. Daphne is using a Best knife, when the blade and handle come apart. The blade flies into her friend Niles and causes major injury. Niles undergoes surgery, and sues Best Knives. Aside from defense costs, the insurer settles a claim with Niles for $250,000. This is paid from Each Occurrence limit, and is subject to Products Aggregate limit.
3. Job candidate Roz visits Best’s facility for an interview, trips over a pothole, and breaks her arm. She sues Best Knives. Aside from defense costs, the insurer settles a claim with Roz for $30,000. This is paid from Each Occurrence limit, and is subject to General Aggregate limit.
4. Equipment falls on Eddie while he is visiting the facility. He sues Best, and the insurer settles for $700,000. This is paid from Each Occurrence limit, and is subject to General Aggregate limit.
5. Marty is injured while using a Best knife, and sues the company for $1,500,000. How much of the following limits remain?

Each Occurrence – $1 million limit is available for each new claim.

General Aggregate – not applicable, as this is a Products claim. However, $1,269,635 remains to settle other claims ($2,000,000 less $365, less $30,000, less $700,000).

Products – Completed Operations Aggregate – $1,750,000 ($2,000,000 less $250,000)

Besides these two aggregate limits, others may apply. Look for that info in next week’s post.