Saturday, October 6, 2012

Know Your Limits - Business Liability

The objective of the Commercial General Liability policy is to provide coverage in the event of a lawsuit when bodily injury or property damage occurs due to your business operations.  The limits on your policy have separate functions to protect your assets in several ways.

The Each Occurrence Limit is the most that the policy will pay out for any one occurrence on the policy.  If you have a $500,000 limit and a $600,000 loss takes place, your policy will only respond to the first $500,000 and you will be responsible for the remaining $100,000 in damages.

The General Aggregate Limit is the most the policy will pay out for all losses in a single policy period.  For instance, your policy has a $1,000,000 aggregate and you have multiple claims totaling $1,000,000.  The policy will act in response to the $1,000,000 aggregate limit and then stop.

The Products and Completed Operations Aggregate reacts to all losses due to a completed operation or product claim up to the policy limit.  This limit comes into play when a service has been completed and that service later results in a loss.  An auto repair shop does a tune-up on a vehicle and the mechanic does not correctly replace the oil plug  when he is done.  Only after the vehicle is released into the owners possession does the loss occur, yet it is still the shop’s responsibility for the loss.  This would be covered under the completed operation limit.

The Personal and Advertising Injury Limit is each occurrence based on a personal or advertising injury offence.  This limit covers you for injuries such as libel and slander to another party.  If your competitor loses business due to statements you make about their operation, they may have legal recourse against you.  This type claim would be subject to the Personal and Advertising Injury limit.

The Medical Expense Limit is on the policy to pay for bodily injury claims regardless of fault.  If a person is injured on your premises, the policy will likely pay for the injuries up to the medical expense limit.  This limit is used as a good-will gesture to dissuade larger liability suits from materializing.

Be sure to check your general liability limits and ask your agent for optional quotes on higher amounts if needed.

I am a Certified Insurance Counselor in Osage Beach MO.  Follow me on Facebook or if you have questions you can reach me by email.