A client's Commercial General Liability (CGL) policy has a General Aggregate Limit of $2,000,000 and a Products-Completed Operations Aggregate Limit of $1,000,000. The per-occurrence limit is $1,000,000. In one policy period, the business incurs $700,000 in claims from ongoing operations (non-products) and $400,000 in claims from products that have been sold and used. How much coverage remains under the General Aggregate Limit?
- A$600,000
- B$300,000
- C$1,300,000
- D$900,000
Show answer & explanationAnswer & explanation
Correct answer: D. $900,000
The General Aggregate Limit applies to all claims except those covered by the Products-Completed Operations Aggregate Limit. In this case, the $700,000 from ongoing operations counts against the General Aggregate. The $400,000 from products counts against the Products-Completed Operations Aggregate, which is a sub-limit of the General Aggregate. Therefore, both amounts reduce the General Aggregate. Remaining General Aggregate = $2,000,000 - $700,000 (operations) - $400,000 (products) = $900,000.
Why the other options are wrong
- A. This calculation incorrectly subtracts only the operations claims, or miscalculates.
- B. This calculation incorrectly applies the limits or totals.
- C. This calculation incorrectly only subtracts the products claims, or miscalculates.
CGL Aggregate Limit Calculation
The General Aggregate Limit in a CGL policy is the maximum amount the insurer will pay for all covered losses during the policy period, typically reduced by payments made under Coverage A (Bodily Injury & Property Damage) and Coverage B (Personal & Advertising Injury), including Products-Completed Operations claims.
- General Aggregate is overall maximum.
- Products-Completed Operations Aggregate is a sub-limit within the General Aggregate.
- Per-occurrence limits apply to individual events but do not reduce the aggregate until paid.
Memory trick: The General Aggregate is the 'big piggy bank' for the year, and both regular claims and product claims take money from it.