Question

ABC Sawmill has a Commercial General Liability policy which includes a $2,000,000 General Aggregate Limit, and a $150,000 Per Occurrence Limit. A covered accident occurs, and the injured party is awarded $150,000. After this unfortunate situation, what are the limits remaining in ABC Sawmill's policy?

A. Per Occurrence Limit: $0; General Aggregate Limit: $2,000,000
B. Per Occurrence Limit: $150,000; General Aggregate Limit: $2,000,000
C. Per Occurrence Limit: $0; General Aggregate Limit: $1,850,000
D. Per Occurrence Limit: $150,000; General Aggregate Limit: $1,850,000

Answer 1

The Per Occurrence Limit would be exceeded in this case, but the General Aggregate Limit would not be affected.

Step-by-step explanation:

The Per Occurrence Limit is the maximum amount of coverage that an insurance policy will pay for a single incident or accident. In this case, the Per Occurrence Limit is $150,000. The General Aggregate Limit, on the other hand, is the maximum amount of coverage that the policy will pay for all claims during the policy period. In this case, the General Aggregate Limit is $2,000,000.

Since the injured party was awarded $150,000 and this amount is within the Per Occurrence Limit, the amount remaining for the Per Occurrence Limit is $0. However, the General Aggregate Limit is still $2,000,000 because it is not affected by the award amount in this case.

Therefore, the correct answer is:

Per Occurrence Limit: $0; General Aggregate Limit: $2,000,000