Question

Supplemental Information. CREC has procured a business owner policy (BOP) that contains a commercial general liability policy (CGL) with each occurrence limit of $1 million, a personal and advertising injury limit of $1 million, a general aggregate limit of $2 million, and a products completed operations aggregate limit of $2 million. Damage to premises rented to CREC - $100,000 on any one premise and medical expense of $5,000 for any one person. Any and all other incidental coverages contained within the CGL are established at minimum levels. CREC has also procured a commercial excess liability (umbrella) – following form with each occurrence limit (liability coverage) of $1 million; personal and advertising injury limit (any one person or organization) of $1 million; and aggregate limit (liability coverage – except with respect to "covered autos) of $1 million.

What dollar amount, if any, will CREC’s BOP insurer (including umbrella carrier) pay for each of the following losses that occurred during the policy period and why will it pay the loss? If the loss is not covered, or not fully covered, explain why. Assume that each loss would be paid in the order presented.

Answer 1

The BOP insurer will pay $100,000 for damage to rented premises and $5,000 for medical expense per person. The aggregate and products completed operations limits are $2 million each. The umbrella carrier will pay up to $1 million for any loss not covered by the BOP policy.

Step-by-step explanation:

The BOP insurer will pay the following amounts for each of the losses:

1. Damage to premises rented to CREC: The BOP insurer will pay $100,000. This amount is within the each occurrence limit of $1 million.
2. Medical expense for any one person: The BOP insurer will pay $5,000. This amount is within the each occurrence limit of $1 million.
3. Aggregate limit: The BOP insurer will pay up to $2 million for all losses in the policy period, including damages to premises and medical expenses.
4. Products completed operations aggregate limit: The BOP insurer will pay up to $2 million for all losses related to products and completed operations.
5. Umbrella coverage: The umbrella carrier will pay up to its each occurrence limit of $1 million for any loss not covered by the BOP policy.