Question

Dan's Bike Shop rents a store space in a building that contains three other retail businesses. The building is owned by Aspen Realty. Dan's Bike Shop has a CGL Policy with the following limits:

Each Occurrence Limit $1,000,000
Damage to Premises Rented to You $100,000
Medical Expense $5,000
General Aggregate Limit $2,000,000
Products/Completed Operations $2,000,000
There was a fire in the building one night after Dan's Bike Shop had closed. The fire resulted in damage to Dan's Bike Shop and the neighboring retail store. An employee working in the retail store was injured trying to escape the fire. It was discovered that the fire was caused by the negligence of one of employees of Dan's Bike Shop's before he left for the day. Claims were filed for the following damages:
Damage to Dan's Bike Shop business personal property $30,000
Damage to Dan's Bike Shop premises (building only) $75,000
Damage to the retail store's personal property $100,000
Damage to the remainder of Aspen Realty's building $225,000
Bodily injury to the retail store employee $15,000
How much would Dan's Bike Shop CGL insurer pay?

Answer 1

In the scenario where Dan's Bike Shop's employee causes a fire, the CGL Policy would likely cover $405,000 of the damages. This includes $75,000 for the premises rented to Dan's Bike Shop, $100,000 for the neighboring store's property, $225,000 for the rest of the building damages, and $5,000 for medical expenses, assuming each claim is within the respective limits of the policy.

Step-by-step explanation:

Given the CGL Policy limits for Dan's Bike Shop and the claims filed due to the fire caused by the negligence of a Dan's Bike Shop employee, we can assess how much the insurer would likely pay for the losses. The policy details include an Each Occurrence Limit of $1,000,000; a Damage to Premises Rented to You limit of $100,000; Medical Expense of $5,000; a General Aggregate Limit of $2,000,000; and Products/Completed Operations of $2,000,000.

• Damage to Dan's Bike Shop's business personal property ($30,000) would not be covered by the CGL as this would typically be covered under a commercial property policy or a business owners policy.
• Damage to the premises rented to Dan's Bike Shop (building only) amounts to $75,000. The CGL policy includes a 'Damage to Premises Rented to You' coverage, which is limited to $100,000. As the claim is less than the limit, it would likely be fully covered at $75,000.
• Damage to the neighboring retail store's personal property is $100,000. Given the negligence falls under the Each Occurrence liability, the claim would be covered up to the limit of $1,000,000. Therefore, this claim would likely be paid at $100,000 as well.
• Damage to the remainder of Aspen Realty's building is $225,000. This also falls under the Each Occurrence liability and would likely be paid in full as it is below the Each Occurrence Limit.
• The bodily injury to the retail store employee is $15,000 which falls under the Medical Expense limit of $5,000. Here, the insurer would pay up to the $5,000 limit for medical expenses.

Adding these up, we get $75,000 for the premises rented, $100,000 for the neighboring store's property, $225,000 for the remainder of the building, and $5,000 for medical expenses, totaling $405,000 that the CGL insurer would pay out.