The general aggregate limit is the total amount that the policy has to pay in any one policy term and it can respond in 3 ways: per policy, per project or per location.
In this video we are going to explain the difference between per project and per location.
If the general aggregate limit is on a “per location” basis, that means it will apply to each location of the policyholder.
This typically is used by owners of buildings and retail stores since they have many different locations and they want aggregate limits for each location.
As for the “per project” basis, the general aggregate limit will apply to each project that the policyholder works on. This is usually used by contractors and companies that do project related work since they work on many different projects. For example, a painting contractor may do hundreds of painting jobs during the course of the policy term and is required to have dedicated limits for each project.
Let’s explore this further:
Bill is a painter who is working on three projects for a property management company. Unfortunately, Bill is not very organized he leaves his tools and paint supplies on the job site. In two separate incidents at project one, one incident at project 2, and one incident project 3, third parties have suffered bodily injury based on Bill’s negligence. Each injured party is awarded $1 million (far fetched but bear with us for the sake of the example); this is a total of $4 million in claims. How does his CGL policy respond?
If Bill’s CGL general aggregate limit is written on a standard basis and his CGL limits are one million each occurrence and two million general aggregate, then his policy will pay one million each occurrence for the first two claims , the each occurrence limit, and it does not matter which project the claims originated from since he has only one general aggregate available. His policy would only pay a total of two million. Bill would be responsible for the remaining two million
If Bill’s CGL policy general aggregate applies on a “per project” basis, then Bill’s CGL policy would pay one million each occurrence for the two claims at project one (the each occurrence limit) and since he has two more one million dollar claims at two different projects and since he has purchased a “per project” general aggregate, his CGL policy would pay $1M each occurrence for a total policy payout of $4M. Bill’s insurance covered all the claims.
Thanks for watching!
Send us a message and let us know your feedback on this video, or send us ideas for future topics you'd like us to cover.