Texas General Lines — Property and CasualtyCommercial LinesEasy
A manufacturer is sued by a customer who claims that a defective product caused bodily injury. The manufacturer's Commercial General Liability (CGL) policy has a Products-Completed Operations Aggregate limit of $1,000,000. After paying $600,000 for the first claim and $300,000 for a second, what is the maximum amount the insurer will pay for a third, similar claim within the same policy period?
- A$1,000,000
- B$0
- C$400,000
- D$100,000
Show answer & explanationAnswer & explanation
Correct answer: D. $100,000
The Products-Completed Operations Aggregate limit is the maximum amount the insurer will pay for all claims falling under this coverage during the policy period. With a $1,000,000 limit, and $600,000 + $300,000 = $900,000 already paid, only $100,000 remains for future claims ($1,000,000 - $900,000 = $100,000).
Why the other options are wrong
- A. This is the initial aggregate limit, not the remaining amount.
- B. There is still remaining coverage under the aggregate limit.
- C. This calculation is incorrect; it subtracts only one claim from the aggregate.
Products-Completed Operations Aggregate Limit
The maximum amount the insurer will pay under Coverage A (Bodily Injury and Property Damage) for all damages arising out of the 'products-completed operations hazard' during the policy period.
- Applies to all claims from completed operations.
- Is an aggregate limit, not per occurrence.
- Reduces with each payment until exhausted.
Memory trick: Aggregates are like a budget pot, once spent, it's done for the lot.