Article Reviewed by a licensed insurance professional: Sam Meenasian (CA dept of insurance license #0F75955).
Estimated reading time: 4 minutes
General liability insurance is a core part of many business insurance programs, but it is not a catch-all policy. A standard commercial general liability policy is designed to respond to certain covered claims involving bodily injury, property damage, medical payments, and personal and advertising injury. Exact coverage depends on the carrier form, endorsements, definitions, exclusions, and declarations page, so this guide should be used for education, not as a substitute for reviewing the actual policy.
1. Each Occurrence
Definition: The occurrence limit is the maximum the insurance carrier will pay for damages under Coverage A and medical expenses under Coverage C arising out of any one occurrence. One occurrence can involve more than one claim or claimant.
Example: If a single accident at your business injures multiple visitors, the total amount available for that occurrence is capped by the each occurrence limit, subject to the applicable aggregate.
2. General Aggregate
Definition: The general aggregate limit is the maximum the insurance carrier will pay during the policy period for Coverage C medical expenses, Coverage A damages other than products-completed operations claims, and Coverage B damages.
Example: If your business has a $2 million general aggregate and already uses $1.5 million for covered claims that count toward it, only $500,000 remains for other claims subject to that same aggregate.
3. Products and Completed Operations Aggregate
Definition: This separate aggregate applies to bodily injury and property damage arising out of your product or your completed work, usually after the product leaves your possession or after the work is completed or abandoned, and generally away from premises you own or rent.
Example: If a contractor finishes a job and a defect later damages a customer’s property, that claim will usually fall under the products-completed operations aggregate rather than the general aggregate.
4. Personal and Advertising Injury Limit
Definition: Many CGL policies include a separate personal and advertising injury limit. This is the most the insurance carrier will pay under Coverage B for damages sustained by any one person or organization because of covered personal and advertising injury, subject to the general aggregate.
Example: If a business faces a covered libel claim, that loss typically uses the personal and advertising injury limit, not the each occurrence limit.
5. Personal and Advertising Injury
Definition: This coverage applies only to specified offenses, such as false arrest, malicious prosecution, certain wrongful eviction or entry claims, libel, slander or disparagement, privacy violations, use of another’s advertising idea in your advertisement, and infringement of copyright, trade dress, or slogan in your advertisement. It does not cover every marketing dispute or every intellectual property allegation.
Example: If a company ad copies another brand’s slogan, the claim may fall under this coverage section if the facts fit the policy wording and no exclusion applies.
6. Damage to Premises Rented to You
Definition: Often called fire legal liability, this sublimit applies to certain property damage to rented or short-term occupied premises when the insured is legally obligated to pay. Under standard CGL wording, it covers fire damage to premises rented to you and certain non-fire damage to premises, including contents, occupied for 7 or fewer consecutive days. It applies to any one premises and sits inside each occurrence limit.
Example: If your business rents event space for a weekend and accidentally damages the venue, this limit may apply if the claim fits the policy wording.
7. Medical Expense Limit
Definition: The medical expense limit is the most the insurance carrier will pay under Coverage C for all medical expenses because of bodily injury sustained by any one person. It can apply without proving fault, but only for certain accidents, and is subject to time limits and exclusions.
Example: If a visitor is injured at your office and needs first aid, ambulance service, or urgent treatment, the policy may pay reasonable medical expenses if they are incurred and reported within one year and no exclusion applies.
What General Liability Usually Does Not Cover
General liability is important, but it usually does not replace professional liability, workers’ compensation, commercial auto, or many cyber and pollution coverages. It also does not eliminate the effect of exclusions, endorsements, or contract assumptions. Businesses should review these gaps before assuming they are fully protected.
Why Policy Wording Matters
The declarations page numbers are only part of the picture. Definitions, exclusions, endorsements, and the carrier’s policy form can materially change how coverage responds. When comparing quotes, review the full policy wording, not just the premium or the headline limits.
Conclusion
Understanding these terms helps businesses read quotes more intelligently and ask better questions before a claim happens. Still, a glossary is only a starting point. Before you bind, renew, or rely on any policy, review your operations, contracts, lease obligations, and endorsements with a licensed commercial insurance professional so the coverage matches the actual risks of your business.
