Policy Limits
General Liability = Per Occurrence + Aggregate
General liability policies include both per occurrence and aggregate limits.
Per Occurrence Limit
Maximum payable per accident, regardless of the number of claimants involved.
The per occurrence limit is the same for both:
- Premises/Operations coverage
- Products/Completed Operations coverage
General Aggregate Limit
The most the insurer will pay for all losses that occur during a policy period.
Applies to Coverage A, B, and C combined.
Note: A separate aggregate limit applies to Products/Completed Operations coverage.
Fire Damage Legal Liability
A specific amount of coverage is included in the general liability policy for fire damage legal liability, which may be increased.
What It Covers:
Fire damage to property the insured leases or temporarily occupies caused by the insured's negligence.
Bankruptcy Provision
Bankruptcy of the insured will NOT relieve the insurer of its obligation under the policy.
Even if you go bankrupt, the insurer still has to pay valid claims.
Insured Duties After Occurrence, Offense, Claim, or Suit
Critical: Failure to fulfill these duties may void coverage!
Notify Insurer Promptly
Notify the insurer as soon as possible of an occurrence or possible claim that can arise.
Record Details Immediately
Immediately record the specifics of any claim or suit brought, and notify the insurer.
Forward Legal Documents
Send the insurer any demands, notice, or summons relating to a suit or claim.
Authorize & Assist
Authorize the insurer to obtain any records or other pertinent information and assist the insurer in its investigation.
Do NOT Make Voluntary Payments
Do not make any voluntary payments, assume any obligation, or incur any expenses without the insurer's consent, or it will be at the insured's own cost.
Legal Action & Other Insurance
Legal Action Against Insurer
- No party has a right to join the insurer as a party in any suit asking for damages against the insured.
- No party may sue the insurer until all policy provisions have been met.
Other Insurance
If other valid and collectible insurance is available for a loss covered under Coverage A or B, the general liability policy will pay as follows:
Primary Basis
If other insurance is primary, the policy will share depending on how the other insurance shares liability.
- Equal shares, OR
- Pro rata up to the policy limit
Excess Basis
The policy pays as excess for:
- Certain types of insurance contracts (regardless of their other insurance clause)
- Any other primary insurance where the insured is an additional insured
Policy Conditions
Premium Audits
The insurer is allowed to audit the insured's books of records at the policy term to make sure adequate premium has been collected for the exposure.
Representations
By accepting the policy, the insured agrees that the statements shown in the declarations are true and complete and that the policy was issued based on the representations made by the insured.
Separation of Insureds
The insurance will apply as if the insured named in the suit were the only named insured, and separately to each insured against whom a claim or suit is brought.
Important: This clause does NOT increase the limit of insurance shown in declarations.
Transfer of Rights of Recovery (Subrogation)
The insured must transfer to the insurer any rights they possess to recover damages from a negligent third party.
The insured may NOT do anything to impede these rights after the loss.
Nonrenewal Notice
Usually 30 DaysThe minimum number of days notice the insurer will provide to the insured if the insurer decides not to renew the coverage is usually 30 days (may differ by state).
Insured's Right to Claim & Occurrence Information
The insurer will provide the first named insured information relating to claims and occurrences, as well as many proceedings for general liability claims-made coverage parts issued in the previous 3 years.
Common Policy Conditions (Interline Form)
What Are Common Policy Conditions?
Universal rules that apply to all coverages in a Commercial Package Policy. These exist for efficiency - without them, every coverage form would repeat the same boilerplate conditions.
Example: A business buys a Commercial Package Policy with commercial property, general liability, and inland marine coverage. The Common Policy Conditions apply to ALL three.
Memory Trick: C-C-E-I-P-T (like "receipt")
Cancellation, Changes, Examination, Inspections, Premiums, Transfer
| Condition | Key Points to Remember |
|---|---|
| Cancellation |
|
| Changes |
|
| Examination of Books & Records | Insurer can audit for up to 3 years (36 months) after policy ends |
| Inspections & Surveys |
|
| Premiums |
|
| Transfer of Rights & Duties |
|
Exam Trap Alerts
3 years / 36 months: Memorize this number for books and records examination!
First named insured: Keeps coming up - they're the main point of contact for everything (changes, cancellation, premiums, refunds).
Inspections does NOT = warranty of safety: Insurers protect themselves here. An inspection doesn't mean they're certifying your premises is safe.
Transfer requires consent EXCEPT death: That's automatic to legal representative.
Separation of insureds: Does NOT increase policy limits - it just applies coverage separately to each insured.
Bankruptcy: Insurer must still pay - bankruptcy doesn't relieve them of obligations.
Insurance follows the person, not the property: Unless the insurer agrees otherwise or you die.