Accurately comparing two general liability insurance policies requires more than just looking at their premiums. To truly see how two different policies stack up against each other, business owners must also look at each policy’s coverages and limits. There are several different coverages and limits to check, but two that deserves special attention are the aggregate limits and per-occurrence limits. If you’re a business owner in East Fishkill, NY, here’s a guide to these two limits and how to compare them when looking at two different general liability policies.
When Selecting a General Liability Insurance Policy, Business Owners in East Fishkill Should Look at Both Aggregate and Per-Occurrence Limits
Limits Determine the Maximum Protection a Policy Provides for Covered Claims
Limits are a foundational component of insurance policies. A policy’s limits determine the maximum protection the policy will provide for a covered claim.
What counts as a covered claim is determined by a policy’s coverages and exclusions, which are two other foundational parts of insurance policies.
As a simplified example, assume an East Fishkill company’s insurance policy has a limit of $100,000. If a covered claim came to $50,000, or even $100,000, the policy would pay the full amount of the claim (less any deductible). If a claim totaled $150,000, though, the policy would only provide partial protection. Even though the claim met all of the policy’s coverage and exclusion requirements, the policy’s $100,000 limit would limit coverage to just that much. The policy would pay up to $100,000 (according to its terms and conditions), but the policyholder would remain responsible for the remaining $50,000.
Thus, it’s important to know what the limits of a general liability insurance policy are before you purchase it for your company. A policy’s limits will greatly impact how much protection your business has.
One General Liability Insurance Policy Can Have Multiple Limits
The above example, where the policy has just one limit, is greatly simplified. Policies often have several limits. Not only can each coverage have a different limit, but a single coverage can have two distinct limits: a per-occurrence limit and an aggregate limit.
A per-occurrence limit determines the maximum benefit that the policy provides for a single occurrence. If any one covered claim exceeds the per-occurrence limit, the policyholder is usually responsible for the difference between the claim’s total and the per-occurrence limit.
An aggregate limit determines the maximum benefit that the policy provides for the duration of the policy, which is one year in most cases. If the aggregate limit for a coverage is reached through several incidents, the policyholder will likely be responsible for any additional claims for the remainder of the policy's term.
Compare General Liability Policies with a Commercial Agent in East Fishkill, NY
Comparing different coverages’ per-occurrence and aggregate limits can become complex, especially once you take into account coverages’ terms and conditions, and exclusions. For help figuring out how general liability insurance policies’ limits would affect your company’s coverages, contact an independent commercial insurance agent who’s based in East Fishkill, NY. Commercial agents specialize in policies like general liability policies. Independent agents will be able to review any general liability policy you’re interested in and help you figure out how well it will protect your business.