What does a per project aggregate mean in your commercial general liability (“CGL”) policy and what does it mean for your business as a general contractor or subcontractor?
At the end of the day, a per project aggregate is an enhancement to your CGL policy that can significantly increase your coverage if your business has multiple construction projects throughout the year.
What Are The Limits Of Insurance?
Look at your commercial general liability policy declarations page and you will see a list of coverage parts and limits of insurance that may include, but not be limited to, the following terms:
- Each occurrence: $1,000,000
- Damage to rented premises limit: $100,000
- Medical expense: $10,000
- Personal advertising injury: $1,000,000
- Policy aggregate limit (other than products-completed operations): $2,000,000
- General aggregate limit: $2,000,000
- Products completed operations aggregate: $2,000,000
Each of these terms describes your limits of insurance, how CGL limits apply and the amount of coverage you have.
Section III of your CGL policy form describes how the limits of insurance are applied, regardless of the number of insureds, claims or individuals or organizations filing suits against your company.1
If your business is providing additional insured status to other parties, this creates incremental potential for erosion of your CGL limits.
However, the “Per Policy Aggregate” is the most your insurer will pay for the TOTAL of all claims during your policy term (usually one year).
What Is A Per Project Aggregate?
If you are a general contractor or sub-contractor, you need general liability insurance to protect your business from claims of third party bodily injury and property damage.
However, it is likely that you work on more than one project in a calendar year…
As such, you may want to have a per project aggregate limit in your CGL policy.
A per project aggregate, sometimes referred to as a designated construction project aggregate limit, means the insurer will provide a separate aggregate limit of liability – in the same amount – for claims that occur on any specific project.
Per Project Aggregate Example
An EPC contractor building commercial and industrial solar and wind projects has a commercial general liability package policy with $1,000,000 per occurrence and $2,000,000 aggregate limit of liability.
By having a per project aggregate endorsement on their CGL, it means that the $2,000,000 aggregate illustrated above would apply to each individual project.
For example if the company does 10 projects per year, the policy limit per project would be $2,000,000 and the aggregate coverage would be $20,000,000 across all of the projects put together.
While a certificate of insurance may have a box to check for a per project aggregate or per location aggregate, the actual insurance policy itself must be endorsed to show that the aggregate is per project.
Because this is highly desirable coverage for general contractors and project owners, it makes sense that your insurance company would charge an additional fee for a per project aggregate endorsement.
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