Liability policies usually have two kinds of limits:
- Per-occurrence limit: the most the policy pays for any one occurrence.
- Aggregate limit: the most the policy pays for all claims in the policy period. Once it’s used up, the policy pays nothing more until it renews.
A GL policy shown as “$1,000,000 / $2,000,000” has a $1 million per-occurrence limit and a $2 million general aggregate.
The standard ISO commercial general liability form has two aggregates:
- General aggregate: everything except products-completed operations claims.
- Products-completed operations aggregate: claims arising from the insured’s products or finished work.
How it shows up in an agency
A general contractor works on eight projects a year. One bad job could use up the general aggregate and leave every other project uninsured. Owners know this, so construction contracts often require a per-project aggregate endorsement, which gives each project its own aggregate. Retailers and restaurants with many sites ask for a per-location aggregate for the same reason.
When the account manager issues a certificate, the contract’s requirements (“$1M per occurrence / $2M aggregate, per-project aggregate”) get checked against the policy’s actual limits and endorsements. Gaps go to the carrier before the certificate goes out. See our ACORD 25 guide.
Common confusion
- Defense costs. Under the standard occurrence GL form, defense is paid in addition to limits. Many claims-made and E&S forms are “defense within limits,” so legal fees erode the aggregate. See claims-made vs. occurrence.
- Umbrellas and aggregates. A well-built umbrella replaces an exhausted underlying aggregate. See umbrella vs. excess.
- Aggregates reset at renewal, not on the anniversary of a claim.
Carriers’ appetites are on our general liability page.