General Liability Insurance Policy Limits

If you have one covered incident like a customer slip-and-fall or you accidentally or some kind of property damage, your policy's per occurrence limit is the primary cap that applies. The per occurrence limit represents the most your insurer will pay for all covered damages arising from that single incident. 

This draws down your Coverage A limits (your each occurrence and general aggregate limits) based on the claim amount.

In short: Limits are broken down by coverage component (Coverage A, B, C, ext), are separate, and generally do not overlap.

If multiple people are injured in a single incident, it is still usually treated as one occurrence, so the same each occurrence limit applies. That means the total of all covered payouts from that single event must fit inside the per-occurrence cap.

In short: Even if multiple people are injured in the same event, it’s typically treated as one occurrence, so the same each occurrence limit applies.

If multiple types of general liability damages like medical bills, legal expenses and bodily injury are involved (which is common), the respective coverage limits for each component applies:

• Advertising Related Injury: Coverage B limits apply
• Bodily Injuries: Coverage A limits apply
• Legal Expenses (Defense Costs): Paid under the coverage part tied to the allegation (Coverage A or B), depending on the claim.

In short: The type of damage or expense falls under their respective coverage component's limits.

If you have an incident that eclipses a $1 million per occurrence limit for example at $1.4 million, your policy will pay for $1 million and you'd be on the hook for $400,000 in liability damages. The same situation applies for when you exceed an aggregate limit.

In short: If you go over a limit, you're responsible for the difference.

The legal related damages and where they apply depend on the basis of the lawsuit, or in other words, the incident it is coming from. For example, if you are being sued for bodily harm you've caused to someone, the legal fees for your defense would be covered by your Coverage A Bodily Injury & Property Damage component subject to its limits. Depending on the policy form, defense costs may be paid outside the limits (most common in standard general liability) or may reduce the amount available to pay damages.

In short: Legal fee coverage limits function based on the source incident (the basis) of the suit against you.

A commercial umbrella policy acts as an additional layer of liability protection above your underlying policies (like general liability). It generally applies once the underlying policy’s applicable limit is exhausted (typically the each occurrence limit for a large claim).

For example, if you have $1M each occurrence on your general liability policy and a covered claim totals $1.4M, the GL policy will pay up to $1M and an umbrella policy (lets say a $2 million per occurrence and $2 million aggregate) will cover all of the remaining $400,000. The umbrella policy would then provide additional coverage above the GL limit, subject to its own per-occurrence and aggregate limits.

In short: Umbrella insurance adds a higher layer of limits above your underlying liability policies once the applicable underlying limit is exhausted.