Insuring your business Featured

8:00pm EDT August 29, 2005
After being in business for years, you know that every day brings new challenges. But if there is one thing you have a handle on, it’s buying stuff. You know the ebbs and flows of your industry, when business is heavier and lighter, what to stock, what to keep back in inventory...for cryin’ out loud, you know how many paper towels your employees go through in a month. So, why does buying insurance have to be so complicated? You have to be covered, but how do you know you’re not missing something important?

How much to buy
Well, the choice is yours (with input from your trusted insurance agent or broker, hopefully). However, you should understand how liability limits work within a commercial general liability coverage form (the product that provides coverage for liability losses arising from premises, operations, products and completed operations). This coverage is decidedly important to your operations, as it represents your insurance shield against litigation and damage to your business.

Your commercial general liability policy limit is the most the insurer will pay, regardless of the number of insureds, claims made, suits brought, or persons or organizations making claims or bringing suits. In other words, the limits do not increase if more than one insured person is named in a suit or claim, more than one person or organization is making a claim, or more than one claim or suit is filed.

A key advantage of commercial general liability coverage forms is the right and duty of the insurance carrier to defend the insured against any suit seeking damages for bodily injury or property damage to which the insurance applies. This defense element becomes especially important in most commercial general liability coverage forms since the carrier’s defense costs are outside your limits of insurance. In other words, the defense costs incurred by your insurance company do not reduce the limits of insurance protection.

There are two sets of aggregate limits listed on your policy. An aggregate limit represents the most the insurer will pay during the policy period. Once an insurer is legally obligated to pay the full amount of the aggregate limit (either by judgment or settlement), the insurer has no further obligation to the policyholder during the remainder of the policy period.

Aggregate limits — general aggregate
The first aggregate limit is called the general aggregate. This aggregate limit is the most the insurer will pay for damages caused by bodily injury, property damage, personal and advertising injury, except for those sums paid as damages within the products-completed operations aggregate — a separate aggregate limit applies to such claims or suits.

Aggregate limit — each occurrence
The each occurrence limit is the most the insurer will pay for a single occurrence, regardless of the number of persons insured or suits brought. All sums paid under this limit reduce the general aggregate limit, or the products-completed operations aggregate limit, depending on the nature of the claim.

Separate limits apply for personal and advertising injury, damage to premises rented to you and medical expense. However, sums paid under each of these limits deplete the general aggregate limit as well. Simply put, you can’t afford to do business without the protective cover found in the commercial general liability.

Your insurance needs may seem complex, and they can be. That’s where your local independent agent comes in. Your agent can help you navigate through the intricacies of aggregates and coverages and limits.

Steve Blankenship, manager, underwriting practices group, can be reached at (330) 887-8417 or In business for more than 157 years, Westfield Insurance provides commercial and personal insurance services to customers in 17 states. Represented by leading independent insurance agencies, the product we offer is peace of mind and our promise of protection is supported by a commitment to service excellence. For more information, visit