Question 1

What is the standard general liability insurance coverage limit for a small business?

Accepted Answer

The most common GL limit for small businesses is $1,000,000 per occurrence with a $2,000,000 general aggregate. This satisfies most landlord requirements and standard commercial contracts. However, standard does not mean adequate. Your actual limit need depends on your industry, the severity of claims that could realistically arise from your operations, and the assets you have at risk. Many small businesses with physical exposure or significant revenue should carry limits above the standard.

Question 2

What is the difference between the per occurrence limit and the general aggregate limit?

Accepted Answer

The per occurrence limit is the maximum your insurer will pay for any single covered incident. The general aggregate is the maximum your insurer will pay for all covered claims combined across the entire policy period. The aggregate does not reset per claim. It depletes with every payout, and once it is exhausted, no further claims in that policy year receive coverage from the GL policy. For a detailed explanation, see What is an Aggregate Limit of Liability?

Question 3

What is the products and completed operations aggregate, and does it share limits with the general aggregate?

Accepted Answer

The products and completed operations aggregate is a completely separate limit from the general aggregate. It applies specifically to claims arising from your products after they leave your control or your work after it is completed. Exhausting the general aggregate does not reduce the products/completed operations pool, and vice versa. Businesses that manufacture, distribute, sell, install, or repair physical goods need to evaluate this limit independently from the general aggregate at every renewal.

Question 4

How often should I review my general liability insurance coverage limits?

Accepted Answer

Review your limits at every annual renewal at a minimum. Beyond that, review them whenever your business grows significantly in revenue, when you take on new or larger contract types, when you open additional locations, or when your operations change materially. Limits that were appropriate at $500,000 in annual revenue may be seriously inadequate at $5,000,000. A limit review should be part of the same discipline as reviewing your financials each year.

Question 5

Does adding an additional insured on my GL policy affect my coverage limits?

Accepted Answer

Adding an additional insured does not create a separate limit for that party. They share your existing policy limits. A claim involving the additional insured draws from the same per occurrence and general aggregate limits that protect your own business. This matters most for contractors who routinely add project owners, property managers, or general contractors as additional insureds. A large claim involving an additional insured reduces what remains available for your own business claims in that same policy year.

Question 6

What is the damage to premises rented to you limit, and is the default amount typically enough?

Accepted Answer

The damage to premises rented to you limit (also called fire legal liability) covers physical damage to a rented or leased space you occupy. The standard default on most GL policies is $100,000. Many commercial leases require tenants to carry $300,000 or more. If your lease requirement exceeds your policy limit, you have a coverage gap right now. This is one of the most commonly overlooked mismatches between what a policy provides and what a contract actually requires.

Question 7

Can my personal assets be reached if a judgment exceeds my GL policy limit?

Accepted Answer

Yes, depending on your business structure. Sole proprietors face direct personal exposure. Even LLCs and corporations can face personal liability when a court pierces the corporate veil or when personal guarantees are involved. A judgment that exceeds your policy limit can attach to business assets, equipment, receivables, and in some cases personal assets. This is one of the strongest reasons to carry general liability insurance coverage limits that reflect realistic worst-case scenarios rather than just meeting contract minimums.

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