What Does General Aggregate Insurance Cover?

General aggregate insurance is a fundamental component of commercial general liability (CGL) insurance. It protects businesses from financial liabilities arising from daily operations, premises, or products. Its primary purpose is to safeguard against third-party claims, which involve individuals or entities outside of the business itself. This coverage helps businesses avoid potential financial setbacks.

Core Coverage Areas

Bodily Injury

This covers physical harm, sickness, disease, or death sustained by someone other than an employee. For instance, if a customer slips and falls on a wet floor in a business establishment and sustains an injury, the policy can help cover their medical expenses and related legal costs.

Property Damage

Another aspect of coverage is property damage. This refers to physical damage to or destruction of tangible property belonging to a third party, or the loss of use of such property. An example might be a contractor accidentally damaging a client’s fence while performing work on their property. The policy would then assist with the costs associated with repairing or replacing the damaged item.

Personal Injury

The policy also extends to personal injury, which covers non-physical harm. This category includes offenses such as libel (written defamation), slander (spoken defamation), false arrest, wrongful eviction, or malicious prosecution. These claims often arise from interactions with customers or the public.

Advertising Injury

Advertising injury is another coverage area within a general aggregate policy. This protects businesses against liabilities arising from offenses committed during the course of advertising their goods, products, or services. Examples include copyright infringement in an advertisement, misappropriation of advertising ideas, or defamation related to promotional activities.

How General Aggregate Limits Function

The general aggregate limit represents the maximum amount an insurer will pay for all covered claims combined during a specific policy period, typically one year. This limit acts as a total cap on payouts for the entire policy term, regardless of the number of individual incidents that occur. For example, if a policy has a $2 million general aggregate limit, the insurer will not pay more than that amount for all claims arising within that year.

Each time a covered claim is paid out, the amount of that payout reduces the remaining available general aggregate limit for the policy period. This means that successive claims throughout the year draw down from the total pool of coverage. Once the aggregate limit is exhausted, the insurer is no longer obligated to pay for additional covered losses for the remainder of that policy term.

It is important to distinguish the general aggregate limit from the per-occurrence limit. The per-occurrence limit is the maximum amount the insurer will pay for any single incident or claim. This per-occurrence limit is a sub-limit within the overall general aggregate limit. For instance, a policy might have a $1 million per-occurrence limit and a $2 million general aggregate limit, meaning no single incident will be covered for more than $1 million, and the total for all incidents will not exceed $2 million.

At the beginning of each new policy period, the general aggregate limit typically resets to its full amount. This reset provides businesses with a renewed pool of coverage for the upcoming year.

Common Exclusions

While general aggregate insurance provides broad coverage, it does not cover every type of business risk.

Professional Liability

Professional liability, often referred to as errors and omissions (E&O) insurance, is not included. This separate coverage is necessary for businesses that provide professional advice or services, protecting against claims of negligence, errors, or omissions in their professional duties.

Auto Liability

Auto liability is also excluded from a standard general aggregate policy. Accidents involving business-owned or operated vehicles are covered under a separate commercial auto insurance policy.

Employee Injuries

Injuries to employees are not covered by general aggregate insurance; instead, they fall under workers’ compensation insurance. This mandatory coverage provides benefits to employees who suffer work-related injuries or illnesses. It addresses medical expenses, lost wages, and rehabilitation costs for employees.

Other Exclusions

General aggregate policies often exclude or limit coverage for punitive damages, which are awarded to punish a defendant rather than compensate a plaintiff. Intentional acts causing harm are also typically excluded, as insurance policies are designed to cover accidental occurrences, not deliberate actions. Businesses also generally need separate, specialized policies for risks like pollution liability or cyber risks, as these are not standard inclusions in a general aggregate policy.