Final answer:
The limits that determine how much an insurer will pay for a covered loss in a CGL policy are the coverage limits and the coinsurance provision.
Step-by-step explanation:
The limits that determine how much an insurer will pay for a covered loss in a CGL (Commercial General Liability) policy are typically defined by two factors: 1) the policy's coverage limits and 2) the coinsurance provision.
The coverage limits refer to the maximum amount the insurer is willing to pay for a covered loss. This is usually specified as a per-occurrence limit, which caps the amount that the insurer will pay for any single event or claim. There may also be aggregate limits, which limit the total amount the insurer will pay during the policy period.
The coinsurance provision requires the policyholder to pay a percentage of the loss, while the insurer covers the remaining cost. For example, if the coinsurance provision is set at 80%, the policyholder would pay 20% of the loss, and the insurer would pay the remaining 80%. Coinsurance is designed to prevent underinsurance and encourage policyholders to insure their property or liability adequately.