Navigating the world of general liability insurance can be daunting, especially with its unique lexicon. This foundational business insurance protects companies from a spectrum of potential liabilities, from bodily injuries on the premises to copyright infringements. But what do terms like “each occurrence” or “general aggregate” really mean? Let’s demystify these definitions to provide a clearer understanding.
1. Each Occurrence
Definition: “Each occurrence” refers to the maximum amount the insurance policy will pay for a single, specific incident or claim.
Example: If a customer slips in a store and sustains an injury, the “each occurrence” limit determines the maximum payout for that particular incident. If the policy has an “each occurrence” limit of $500,000, that’s the most the insurance will cover for the claim, irrespective of the policy’s aggregate limits.
2. General Aggregate
Definition: The “general aggregate” limit is the total amount an insurance policy will pay out for claims during one policy term. It’s essentially the ceiling or cap for the policy period, typically one year.
Example: If a business has a general aggregate limit of $2 million, and over the policy year incurs claims totaling $1.5 million, only $500,000 remains available for future claims within that policy term.
3. Products and Completed Operations Aggregate
Definition: This is the maximum amount the policy will pay for claims resulting from products sold or services rendered during the policy period.
Example: A consumer might claim harm from a product sold months ago. The product’s claim will pull from this aggregate, separate from the general aggregate.
4. Personal and Advertising Injury
Definition: This covers claims arising from offenses like libel, slander, invasion of privacy, copyright infringement, or wrongful eviction.
Example: If a business’s marketing campaign inadvertently uses copyrighted content without permission, any resulting claim would fall under this category.
5. Damage to Premises Rented to You
Definition: Also known as “fire legal liability,” this covers property damage claims for rented premises caused by the policyholder’s negligence, often limited to fire.
Example: If a business rents office space and accidentally starts a fire, resulting in damage, this coverage kicks in.
6. Medical Expense Limit
Definition: This is the maximum amount the policy will pay for medical expenses from a bodily injury sustained on the business’s premises or due to its operations, regardless of fault.
Example: If a visitor gets injured at a business event, their immediate medical expenses (like first aid or ambulance fees) are covered up to this limit.
Conclusion
Understanding general liability insurance definitions is crucial for businesses. It ensures they’re adequately protected, can anticipate potential out-of-pocket expenses, and can make informed decisions when selecting or adjusting their policies. While the aforementioned terms are foundational, it’s always recommended to engage with an insurance professional to navigate the intricacies of any policy.
