What is your deductible? The other is the Per Claim deductible and it applies only to liability policies, like General Liability or Professional Liability.
This one is a little more complex. What it means is that you have a separate deductible that gets applied for each party that files a claim against you in a single covered occurrence. ABC Construction is installing the plumbing system in a condo building with 12 units. ABC neglects to properly seal the upstairs master bathroom shower drain in each of the units.
Sometimes words and phrases may sound similar but can carry very different meanings. Therefore, it is incredibly crucial for businesses to understand the lingo they are likely to encounter in their insurance policy. What the difference between per occurrence and aggregate liability limits? There are two really significant legal terms that you need to understand - especially if you ever have to submit a claim on your liability insurance. This article will discuss the terms "per occurrence limit" and "aggregate limit" so you know the difference.
A per occurrence limit is the most the insurer must pay for for the sum of all damages for any one occurrence. The policy will never pay more than the per occurrence limit for any one occurrence. The definition of "occurrence" is very important here, and is generally defined as, "an accident, including continuous or repeated exposure to substantially the same general harmful conditions".
There is a lot of legal wrangling and industry over this definition. A per occurrence limit can sometimes be referred to as "any one claim," "per claim," and "each and every claim.
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Commercial general liability CGL insurance, or business liability insurance, is most often purchased by entities such as real estate agents, general contractors, landscaping companies, and others of the like, to protect against any instances where bodily injury, property damage, or advertising injury may occur, which could result in an insurance claim that the business entity would be lawfully obligated to pay for.
Insurance companies may provide two different types of liability coverage— occurrence or claims-made —and each comes with its own set of advantages and disadvantages. Occurrence Policy : An occurrence policy protects a business from any covered incident that happens during the policy period, regardless of when a claim is reported.
This type of policy will cover a business even if the claim comes in after the policy is canceled, so long as the incident occurred within the time frame enforced by the initial policy. Example : Bob the business owner purchased an occurrence policy in but switched to a new form of coverage or insurance supplier in Bob gets sued in for an incident that occurred in In this instance, Bob is still covered by his original occurrence policy, because it was active at the time of the incident.
Claims-Made Policy : A claims-made policy provides coverage for claims that occur, and are reported, within the specific time period set forth by the policy. This means that if a policy is canceled, or a premium isn't paid, any claim that comes through will not be covered, even if the incident occurred during the period when the policy was active. Example : Bob the businessman purchases a claims-made policy in and continues coverage through , then cancels.
In , Bob is sued for an incident that occurred in Since the claims-made policy is no longer in effect, and he did not purchase tail coverage, Bob is the liable party obligated to pay for damages—not his old insurance carrier. Tail Coverage , or, officially, an extended reporting period ERP , is an additive option that becomes available only after a policy has been terminated.
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