Each liability policy has its limits. There are two types of limits:
1. Per occurrence limit. As the name suggests, the liability insurance policy offers you a limit (the most money it will pay) per certain accident.
2. Aggregate limit. It is a type of a limit paid by your insurer for all accidents during the whole policy term (usually a year). Usually, it is twice larger than per occurrence limit: single occurrence limit may be 1 000 000 dollars and aggregate limit is 2 000 000 dollars. Do not forget, that aggregate limit comprises the total amount of insurance. So, you should think over beforehand about the exposure to risk during the policy term.
When there is a claim against your company, the insurance firm has two ways how to handle it:
1. to pay the claim loss (indemnify you);
2. to defend you in the court and pay all attorney costs associated with this.
You are also suggested to choose whether to include the defense costs in your policy limits or not. When you choose the included defense cost, you should be aware that the amount of your single limit is reduced by the sum needed for your defense as attorney fee and associated costs needed for your defense will be paid out of your limit.
In the next article about business liability insurance: exclusions and endorsements.
