Whether you’re running a construction business or a moving company—and anything in between—you need insurance to protect yourself. While an insurance agent can definitely help you get a policy and understand it, you’re a small business owner, and chances are you like to do your own research too. So what’s one insurance term you should know about? General aggregate.
The general aggregate limit is the maximum amount an insurance company would pay out over a policy period. And that’s crucial information to know!
Let’s go over the basics about general aggregate limits in general liability insurance.
What Does ‘General Aggregate’ Mean in an Insurance Policy?
A general aggregate sets the limits of your commercial general liability (CGL) policy. The term is also known as “general aggregate limit of liability,” which is the maximum amount of money an insurance company will pay for claims, losses, and lawsuits that happen during the active period of your policy (typically one year). The purpose of the limit is to essentially balance the risks your insurer faces with the protection your business needs.
The general aggregate limit applies to all the different categories in your CGL policy, like bodily injury, property damage, advertising injury, and medical expenses. If the limit for these categories is paid out—either in a single large claim or numerous smaller claims—then you won’t get any further compensation.
Let’s say your construction company has a general liability policy with an aggregate limit of $3 million. This is the payout cap on all claims during your policy tenure. So if there is a claim settled under the policy for $2 million, only $1 million in liability limits remain, as your general aggregate is $3 million altogether. If you went over that amount (let’s say there’s another $2 million claim for damages), you would be responsible for any difference, and all subsequent claims during the remainder of the policy year unless you have an umbrella policy (i.e. excess liability insurance).
When the coverage limits have been reached, they don’t reset until the next time you renew your policy. This is often done annually. You may be able to reinstate your aggregate before that by paying an additional premium. If you want to have a higher general aggregate limit the next time around, you’ll need to pay a higher premium for your general liability insurance policy.
Your aggregate limits may depend on different factors. You may be required to get a certain aggregate to meet licensing requirements. On the other hand, you may decide on your own what maximum protection you want. Even though no one likes to think about worst-case scenarios, you’ll have to consider them when deciding what coverage you need, and the policy premiums you’re willing pay to get that coverage.
Per Occurrence vs Aggregate Insurance Limits
General aggregate and per occurrence are two common ways insurance companies define the limits of their financial responsibility to a policyholder.
As already described in the previous section, the general aggregate limit of your insurance policy caps the maximum payout on all types of liability claims you’re covered for.
In contrast, the per occurrence limit defines the maximum payout on a single incident. This limit applies to all claims caused by this insurance event, even if there are a number of injuries or damages from numerous claimants. Per occurrence combines all claims into one deductible.
Here’s an example how general aggregate and per occurrence limits work together. Your construction company has a CGL policy with a $3 million general aggregate, but the insurance company also sets a $1 million per occurrence limit. If there’s an accident, the total payout for bodily injury, property damage, medical expenses, and all other covered categories related to this accident is $1 million. Any claims that go beyond this amount won’t be paid out by the primary general liability policy, even though the general aggregate is $3 million.
It’s worth mentioning that policies may also have a per claim limit, which caps the maximum payout on individual claims.
The Difference Between General Liability and Umbrella Policies
General liability and umbrella insurance policies are two kinds of insurance products. You may want to get an umbrella policy on top of your general liability if your business needs it.
It’s an additional layer of security for your business. You can get an umbrella policy to mitigate the risk of running out of coverage under your CGL policy because you’ve reached the general aggregate limit. Umbrella insurance covers extra claims beyond the aggregate, up to a certain fixed amount.
For example, let’s say your construction company receives a claim for $4 million, but your occurrence limit is only $1 million. If the case is proven, the primary insurance company will pay out $1 million to the claimant, and you’ll need to pay the remaining $3 million. Luckily, you also have a $3 million umbrella policy limit, which covers that extra $3 million (phew!) So essentially you’re still protected even after your general liability coverage is exhausted.
Get to Know Your Insurance Policy
Grasping terms like ‘general aggregate’ is key in understanding the protection you get from your commercial general liability insurance. But keep in mind—we recommend you read your policy and ask your agent/broker for clarification if there is any confusion. While many sections of CGL policies are similar, terms can vary, and a solid understanding of policy limits and how they apply is important to know.
1. Introducing Yourself
Your introductory email needs to pack a lot of information into a small package. Try something like this:
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Hello Jane,
My name is John Doe and I work for ABC Agency, where we provide business insurance policies to many of Dallas' rockstar small businesses.
Congratulations on your new business, Jane's Bakery. Are you wondering if you have all the insurance you need? Or if your policies will really cover you in a pinch?
At ABC Agency, we pride ourselves on providing robust, comprehensive coverage options to companies like yours with flexible, pay-as-you-go plans.
Are you available this week to talk more about how we can help? I can help you find the most affordable rates and the best policies out there.
I look forward to speaking with you soon.
Cheers,
John Doe
2. Presenting a Quote
Once you've met with your potential client, a quick reply with their quote will get the ball rolling.
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Hi Jane,
Thanks so much for meeting with me this morning. I loved touring Jane's Bakery–I can still smell those delicious chocolate chip cookies baking! You have a great location, and I'm sure you're going to do great on Front St.
After reviewing my notes, I've pulled together an insurance quote for you (attached). I recommend a business owner's policy. A BOP includes several insurance products in one: liability, property insurance, and business interruption insurance. It offers robust coverage at a competitive price.
I'll call you in a few days to see what you think about this insurance plan. In the meantime, if you have any questions, don't hesitate to email me or call me at [phone number].
Again, thank you for your time today. I look forward to working with you in the future.
Cheers,
John Doe
3. Thanks for Purchasing a Policy
Gratitude is important! It's never a bad idea to thank your clients for their business.
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Hi Jane,
Thank you for choosing a business owner's policy with ABC Agency. We know it's so important to get the right coverage for your business, and we are honoured you've placed your trust in us.
We're excited to work closely with you, and our no. 1 goal is to make sure you're business is always protected.
Do you have any questions? We are here to help. Reach out whenever something comes to mind.
Thank you again for choosing ABC Agency to insure Jane's Bakery.
Cheers,
John Doe
4. Welcome Email
A welcome email helps clients feel like you're there to help–and can softly pitch other insurance products you offer.
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Dear Jane,
Welcome to the ABC family! We are thrilled to have you as a new customer and can't wait to meet all of your insurance needs.
As an independent insurance agency, we work with multiple insurance providers to find the best coverage options for all our customers. If you need any other type of insurance–like [include additional offerings unique to your agency, like life insurance, health insurance, home insurance or anything else]–we can help you too.
Do you want to discuss any of these policies?
Cheers,
John Doe
5. Introducing a New Product
A happy client may want to expand their business with you.
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Hello Jane,
I hope all is well with you and Jane's Bakery. I stopped in yesterday for a blueberry muffin and coffee, and they were delicious. I loved the hint of cinnamon in the muffin! Was that your idea?
I wanted you to be the first to know we are now offering commercial vehicle insurance to our policyholders. Auto insurance for your catering vans is super important since your personal car insurance won't cover them.
We're offering this insurance coverage solely to our current business clients at the moment and have some very competitive rates.
Would you like me to work up a quote for you?
As always, thanks so much for being a part of the ABC family.
Cheers,
John Doe
6. Asking For Referrals
Once your relationship is established and comfortable, let your clients help you grow.
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Hi Jane,
You've been a valuable member of the ABC family for two years now, and we so appreciate your business–not to mention the muffins you supply for our monthly meetings!
Because you are a valued policyholder, I wanted to ask a quick favour. I know you are active in the local Chamber of Commerce, and I'm hoping you might know some colleagues who would benefit from working with our insurance company.
Referrals are one of the most effective ways to connect with our community since people really trust their friends, family and colleagues. Is there anyone you'd recommend I speak with?
Remember that in addition to business insurance products, we offer everything from life insurance policies to pet insurance.
As a thank you for your help, we will send you an Amazon gift card of $100 when your referrals buy insurance from us.
Thanks so much for your help!
Cheers,
John Doe
7. Policy Renewal
If your client needs to renew their policy with you, send an email like this:
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Hi Jane,
I hope you're doing well! What a year it's been—from being listed as one of the top 5 bakeries in Dallas to being an official vendor for the city—you have so much to be proud of.
Just a heads up that your business owner's policy is up for renewal soon and will expire on June 15, 2023.
If you're still happy with the coverage, we can easily renew it for you.
Do you have some time to chat this week?
Looking forward to serving you again!
Cheers,
John Doe