General Aggregate limit in Commercial General Liability Insurance is a crucial term in liability insurance. It is necessary for all policyholders to understand its working.
In commercial general liability insurance, the general aggregate is the maximum amount of money the insurer will pay out during a policy tenure. The general aggregate limit places a ceiling on the insurer’s obligation to pay for property damage, bodily injury, medical expenses, lawsuit, etc. which may arise during the tenure of the insurance policy. As it happens with other insurance coverages, the higher the commercial general liability insurance coverage, the higher would be the premium.
The insurer actively covers the policyholder for claims, losses, and lawsuits until reaching the aggregate limit. That might happen in the case of a single large claim or multiple small claims.
In some situations of general aggregate limit in commercial general liability insurance, the reinstatement of the limit occurs. Once the aggregate limit has crossed the maximum limit under the current policy tenure, it usually doesn’t reset until the next policy renewal. However, some insurance companies actively facilitate the reinstatement of the aggregate limit once it has been exhausted. Though you would have to pay extra to get this feature; it ensures a double safety net for you.
Like other business entities, insurance companies also face risks. Their objective is to offer you the protection you need for your business while curtailing their risks. Here the general aggregate can help in balancing the insurer risks with the help of insured protection.
Read More: What Are Supplementary Expenses Covered by Commercial General Liability Insurance?
The general aggregate limit covers losses or damages related to medical expenses. Once the policyholder has crossed the general aggregate limit, the commercial general liability insurance company will be no under obligation to compensate for losses. After exhausting the aggregate limits, the policyholder assumes responsibility for settling any litigation costs or claims that arise.
If you are in a business where lawsuits may bring high costs, you might consider going with high coverage limit at the time of applying for the policy. Keep this in mind, by opting for the insurance policy which comes with a higher aggregate limit; you can actually curtail your risks.
In case you doubt how much CGL insurance coverage you should go for, you can take the help of SecureNow, a leading corporate insurance advisor who would determine the right balance of liability coverage as per the different needs of your business.
Case: General Aggregate Mean in Insurance Policy
Since 2009, R.S Chemical has been working in the industry. Last year, the chemical manufacturer had to face a major brunt. Company accidentally flushed flammable liquid into the city’s sewage system. It caused an explosion which resulted in chaos throughout the area.
Read More: Who is an Insured under Commercial General Liability Insurance?
The explosion severely damaged the city, tearing up streets and halting the transportation system. Due to the access to the neighborhood being cut off, other businesses in the vicinity of the explosion also experienced a tough time. The explosion damaged the properties of other businesses as well.
As R.S Chemical had a commercial general liability insurance policy, it approached the insurer for the claim settlement. The total coverage available was Rs 50 lakh. The insurer appointed a surveyor to inspect the construction site and found that the loss was valid. Here, the insurer settled the claim accordingly. Because the extent of the loss was significant, the insurer used the entire sum insured to settle one claim.
A few months ago, R.S Chemical had to face one more losses due to the dyes it manufactured. The dyes manufactured by it caused severe irritation and other ailments to the consumers.
R.S Chemical filed a case against the insurer for the claim settlement. Despite the claim being valid, the insurer denied it, citing that the policyholder had already exhausted the coverage limit.
About The Author
Rajesh Mehta
MBA Finance
Rajesh has become a distinguished expert in liability insurance with over 8 years of extensive experience in the insurance industry. As a dedicated writer for SecureNow, he crafts insightful and informative blogs and articles that help businesses and individuals understand the nuances of liability insurance, from policy details to industry trends. Throughout his career, Rajesh has developed a profound knowledge of various types of liability coverage, including professional, general, and product liability insurance. Their expertise enables them to break down complex topics into accessible content, making it easier for readers to make informed decisions about their insurance needs.
