Do All CGL Policies State Aggregate Limits Only For Products and Completed Operations Hazards?

Not all policies state aggregate limits only for the Products and Completed Operations hazards. Some provide a total limit of liability. For example, many umbrella policies use the following Limits of Liability wording:

The limit of the company’s liability shall not exceed the amount stated in Item 2(a) of the declarations as a result of any one occurrence. The company’s liability shall be further limited to the amount stated in item 2(b) of the declarations in the aggregate for each annual period during the currency of this policy separately in respect of (1) the products hazard; (2) the completed operations hazard; and (3) personal injury by occupational disease sustained by any employees of the insured;

In Garamendi v. Mission Ins. Co., 131 Cal.App.4th 30 (2005), the California Court of Appeals for the Second District examined this wording and held that the word “separately” in the aggregate limits provision did not mean “only” and that the policy therefore contained a total aggregate limit, in addition to separate aggregate limits for products/completed operations and occupational injury. Id. at 41, 49.

Policyholders argue that the term “separately” in the Limits of Liability section should be read to mean “only” so that the policy aggregate applies only to the enumerated hazards. This exact argument was made and rejected in the Garamendi decision. As the Garamendi court held, the policy contains a total aggregate limit, in addition to separate aggregate limits for products/completed operations and occupational injury. Id. at 41, 49; but see Weyerhaeuser v. Commercial Union, 15 P.3d 115 (Wash. 2000). Accordingly, under Limits of Liability clauses that apply aggregates “separately” to each hazard, any operations claims occurring in the policy period should be subject to a total aggregate limit.