A commercial liability policy has a $600K aggregate limit and a $200,000 occurrence limit. After two claims of $300K and $200K, how much coverage is available if the insured company has a third claim?

In a commercial liability policy, both the aggregate limit and the occurrence limit are essential in determining payout after claims are made. In this case, the occurrence limit is the maximum amount payable for a single claim, which is $200,000. The aggregate limit is the total maximum payout for all claims during the policy period, set at $600,000.

After the first claim of $300,000, which exceeds the occurrence limit, the policy only pays out $200,000, leaving the insured with $400,000 remaining in the aggregate limit. Following the second claim of $200,000, this amount again matches the occurrence limit, allowing another payout of $200,000. This payment reduces the aggregate limit from $400,000 down to $200,000 available for future claims.

When the third claim occurs, it will also be subject to the occurrence limit of $200,000. However, since the total available under the aggregate has now been reduced to $200,000, that is the maximum amount that can be utilized for this claim. Hence, the coverage available after these two claims would still be up to the full occurrence limit, but it is constrained by the remaining aggregate amount of $200,000, which is the