When comparing general liability insurance quotes for a South Burlington, Vermont business, it’s important to make sure you’re comparing apples to apples (and not oranges). You can’t just look at policies’ premiums, but must also check their coverages and limits. While there are many coverages and limits to look at, two items you’ll want to pay special attention to are the per-occurrence limits and aggregate limits.

Compare Per-Occurrence and Aggregate Limits When Getting General Liability Insurance Quotes for a South Burlington Business

Limits Affect General Liability Insurance Policies’ Premiums

Limits are the maximum amounts that an insurance company will play on a valid claim or claims. As such, they directly affect an insurance company’s risk — and the premiums they charge. As limits go up, insurers assume more risk because they might have to pay more on a claim. To offset this risk, they increase premiums when limits are increased.

Although higher limits cause policies’ premiums to increase, the premium increase is sometimes small compared to the increase in a limit. For instance, a general liability policy that has a $1 million limit might be only a few dollars more each month than a policy that provides only $500,000 worth of protection.

Per-Occurrence and Aggregate Limits Are Different

Many general liability insurance companies have multiple limits within their terms and conditions. Not only can they have different limits for different coverages, but each coverage may have two limits. If it does, it’s important to consider both.

The two types of limits that you’re likely to come across are per-occurrence limits and aggregate limits. A per-occurrence limit is the maximum amount the insurer will pay for a single covered claim. An aggregate limit is the most an insurance company will pay for the duration of the policy, which is often either six months or one year.

As an example, assume your South Burlington business has a liability policy that has a $300,000 per-occurrence limit and a $1,000,000 aggregate limit. Also, assume you have four serious covered claims that reach the per-occurrence limit during the duration of the policy (before it renews). The first three claims would be paid $300,000 each because that’s the policy’s per-occurrence limit. The fourth claim, even if it itself was worthy of a $300,000 payment, would be paid only $100,000. The total amount paid thus far would be $900,000, and a payment of $100,000 would reach the policy’s aggregate limit.

The Right Limits for Your South Burlington, VT Business

Because limits affect both premiums and how much an insurance company will pay on covered claims, it can be challenging to find the right amount of protection. As you compare general liability insurance policies for your South Burlington business, work with an insurance agent to first determine what per-occurrence and aggregate limits your company should look for. Once you settle on the limits you want, your insurance agent will be able to get quotes on policies that provide the amount of protection you’ve selected, and you’ll be able to see which insurer is offering the best premiums on a policy with those limits.