A contractor's general liability policy has a $500,000 per occurrence limit and $1,000,000 aggregate limit. After two claims totaling $300,000 and $400,000, how much coverage remains for additional claims?
Correct Answer
A) $300,000
The aggregate limit is reduced by total claims: $1,000,000 - $300,000 - $400,000 = $300,000 remaining.
Why This Is the Correct Answer
The aggregate limit is the total the insurer will pay for all claims during the policy period. Two claims of $300,000 and $400,000 total $700,000 paid against the $1,000,000 aggregate. The remaining coverage is $1,000,000 - $700,000 = $300,000.
Why the Other Options Are Wrong
Option B: $700,000
$700,000 is the total already paid out in claims — not the remaining coverage. Confusing the amount paid with the amount remaining is a classic calculation error.
Option C: $0
$0 would be correct only if the aggregate limit had been fully exhausted. Since only $700,000 of the $1,000,000 aggregate has been used, $300,000 of coverage still remains.
Option D: $500,000
$500,000 is the per-occurrence limit, not the remaining aggregate. Per-occurrence limits cap individual claim payouts but do not represent remaining aggregate capacity after prior claims.
Memory Technique
Think of the aggregate as a bucket with $1,000,000. Each claim scoops water out. After scooping $300K and $400K ($700K total), only $300K of water remains in the bucket.
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