A general aggregate is a crucial term in commercial general liability insurance, which is necessary for all policyholders to understand.

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 the other insurance coverages, the higher the commercial general liability insurance coverage, the higher would be the premium.

Under this, the coverage will pay for any claim, loss and lawsuit in which a policyholder is involved, until it reaches the aggregate limit. That might happen in case of a single large claim or multiple small claims.

In certain situations, the general aggregate limit is reinstated in some situations. 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 facilitate 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.

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Losses or damages which are paid with regards to medical expenses are also covered under the general aggregate limit. Once the policyholder has crossed the general aggregate limit, the commercial general liability insurance company will be no under obligation to compensate for losses. It means any litigation costs which occur or claims which are made after the aggregate limits have been exhausted will require being settled by the policyholder himself/herself.

If you are in the business where lawsuits may bring the 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 commercial general liability 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

Since 2009, R.S Chemical has been working in the industry. Last year, the chemical manufacturer had to face a major brunt when it accidentally flushed flammable liquid into the city’s sewage system. It caused an explosion which resulted in chaos throughout the area.

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The explosion caused severe damages to the city as streets were torn up and transportation system came to halt. Other businesses in the vicinity of the explosion also had to face a tough time as the access to the neighborhood had been cut off. The explosion damaged 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 of 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. As the extent of loss was great, the entire sum insured was used towards settling one claim.

A few months ago, R.S Chemical had to face one more loss when the dyes manufactured by it caused severe irritation and other ailments. A case was filed against R.S Chemical who approached the insurer for the claim settlement. Though the claim was valid; the insurer refused to settle it because the policyholder had already exhausted its coverage limit.