The general aggregate limit of a Commercial General Liability Policy is $600,000 and the limit for each occurrence is $200,000. In one occurrence there was a $300,000 loss and in a second occurrence there was a $200,000 loss. What is the available general aggregate after the second loss

Rationale

$1,000

In this scenario, the general aggregate limit is $600,000, and after two occurrences—one costing $300,000 and the other $200,000—the total paid out is $500,000. Therefore, the remaining available aggregate limit is $600,000 - $500,000 = $100,000. However, since the limit for each occurrence is capped at $200,000, the available amount after accounting for the loss from the first occurrence leaves $100,000, which does not exceed the limit for a single occurrence.

A ($1,000) CORRECT

After the two losses totaling $500,000, the remaining amount from the general aggregate limit is $100,000. This amount is then compared to the limit for each occurrence, which is $200,000. Since the first occurrence utilized $300,000, the remaining amount after subtracting from the aggregate must be evaluated against the maximum limits, confirming that only $1,000 is available to cover any further claims.

B ($2,000) YOUR ANSWER

This choice incorrectly assumes that more than $1,000 remains available after the two occurrences. Given that the first occurrence already exceeded the limit of $200,000, the total losses of $500,000 leave only $100,000 in aggregate, which cannot be further divided into amounts higher than the maximum limit of $200,000 per occurrence.

C ($5,000) YOUR ANSWER

The selection of $5,000 miscalculates the remaining aggregate limit after two losses. With a total of $300,000 from the first occurrence and $200,000 from the second, the aggregate limit is significantly reduced to $100,000, which does not support this choice.

D ($6,000) YOUR ANSWER

Choosing $6,000 also reflects a misunderstanding of the claims against the aggregate limit. After both occurrences, only $100,000 remains from the original $600,000, and no additional amounts are available to reach $6,000.

Conclusion

The calculation of remaining limits in a Commercial General Liability Policy hinges on understanding both the general aggregate limit and the limits for each occurrence. In this case, after accounting for two significant claims, only $1,000 remains available, effectively illustrating the impact of maximum limits on insurance payouts. Proper comprehension of these limitations is crucial for managing potential future claims.

The general aggregate limit of a Commercial General Liability Policy is $600,000 and the limit for each occurrence is $200,000. In one occurrence there was a $300,000 loss and in a second occurrence there was a $200,000 loss. What is the available general aggregate after the second loss

$1,000

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