A client's Commercial General Liability (CGL) policy has a General Aggregate Limit of $1,000,000, a Products-Completed Operations Aggregate Limit of $500,000, and a Each Occurrence Limit of $300,000. During the policy period, the business has three separate liability claims: a slip-and-fall for $150,000, a customer injury from a faulty product for $200,000, and a fire due to contractor error after work was completed for $250,000. How much will the CGL policy pay in total for these claims?
- A$700,000
- B$1,000,000
- C$600,000
- D$650,000
Show answer & explanationAnswer & explanation
Correct answer: C. $600,000
The slip-and-fall ($150,000) falls under the Each Occurrence Limit and contributes to the General Aggregate. The faulty product ($200,000) and contractor error ($250,000) both fall under Products-Completed Operations, which has a $500,000 aggregate. The total for Products-Completed Operations is $200,000 + $250,000 = $450,000, which is within its $500,000 limit. The total paid is $150,000 (slip-and-fall) + $450,000 (products-completed operations) = $600,000. This $600,000 is also within the $1,000,000 General Aggregate Limit.
Why the other options are wrong
- A. This might arise from miscalculating the Products-Completed Operations aggregate or ignoring one of the claims.
- B. This is the General Aggregate Limit, but the total claims paid are less than this limit.
- D. This incorrectly sums all claims ($150k + $200k + $250k = $600k) and adds an arbitrary amount, or misunderstands how the aggregate limits apply.
Commercial General Liability (CGL) Aggregate Limits
CGL policies typically include a General Aggregate Limit, which is the most the insurer will pay for all covered damages during the policy period, and often a separate Products-Completed Operations Aggregate Limit within the General Aggregate for specific exposures.
- General Aggregate limit applies to most claims.
- Products-Completed Operations Aggregate applies to claims from products or completed work.
- Each Occurrence limit also applies per incident.
Memory trick: General is the big umbrella, Products-Completed is a specific bucket under it.