Minimum Acceptable Policy Limits

The minimum acceptable policy limits are given as below:

  • $1,000,000 Each Occurrence (Bodily Injury and Property Damage)
  • $2,000,000 General Aggregate
  • $2,000,000 Products / Completed Operations Aggregate
  • $1,000,000 Personal / Advertising Injury
  • $100,000 Damage To Rented Premises
  • $ 5,000 Premises Medical Payments

They’re six different limits that are displayed on the declarations page of the modern policy form. The most important of these is the Each Occurrence limit which should be at least $1,000,000. This is the amount that the policy will pay for any one covered lawsuit arising out of a single occurrence. The other two most important limits are the General Aggregate and the Products / Completed Operations Aggregate which should both be at least $2,000,000. These aggregate limits put a cap on what the policy will pay out for multiple lawsuits during a 12 month policy year. Industry experts recommend that the aggregate limits should be double the each occurrence limit. The General Aggregate applies to lawsuits that arise from injuries while the construction is in progress and the products/completed operation aggregate applies to lawsuits that arise from injuries that occur after the sale has been made.

The personal and advertising injury limit should be at least $1,000,000. The damage to rented premises limit of $100,000 only comes into play when you are a tenant and you damage the landlord’s building. Premises medical payments with a limit of $5,000 is a no fault coverage that pays benefits primarily to visitors to your business premises that have slip and fall accidents. If their injuries are more serious, you can fall back to your each occurrence limit of $1,000,000 if they threaten a lawsuit.