Arizona Adjuster Practice Exam

What is the general aggregate limit under a businessowners policy for injury or medical expenses?

1. Equal to the policy's liability limits

2. It is two times the policy's liability and medical expenses limit

3. Fixed at $1 million annually

4. Based on the total number of claims filed

The correct answer is: It is two times the policy's liability and medical expenses limit

The general aggregate limit under a businessowners policy (BOP) typically pertains to the maximum amount the insurer will pay for all claims within a policy year. In the context of liability and medical expenses, this limit reflects the insurer's exposure to risk over multiple claims and incidents. The correct understanding is that the general aggregate limit is commonly set to be two times the policy's individual liability limit, which aligns with the structure of many BOPs designed to cover a wide range of incidents over the term of the policy. Therefore, if a policy has a liability limit of, for example, $500,000, the aggregate limit would be $1 million, allowing businesses to have coverage for ongoing liabilities that may arise from various incidents throughout the year. This setup is particularly crucial for businesses that may face multiple claims due to the nature of their operations, ensuring that the overall insured limits remain adequate irrespective of the number of separate claims that may arise. The other options do not accurately reflect standard BOP structures; for example, stating the general aggregate limit simply is equal to the policy's liability limits ignores the potential for multiple claims, whereas a fixed limit isn’t standard across all policies, as it can vary widely based on the specifics of the business and policy