If the per-incident limit equals the aggregate limit, what should the association consider?

• A. Purchase an umbrella policy to increase the overall CGL limits, or increasing the aggregate.
• B. Reducing the policy term to save premium costs.
• C. Switching to a property-only policy.
• D. Ignoring the issue and keeping the same policy.

Answer: (A)

This question focuses on liability coverage limits. The per-incident (per-occurrence) limit is the maximum the policy will pay for a single claim, while the aggregate limit is the maximum it will pay for all claims during the policy period. If these two are equal, a single serious incident could use up all available coverage, leaving no protection for additional claims or defense costs.

The prudent response is to boost overall limits. An umbrella policy is designed for this purpose: it sits above the underlying CGL policy and provides additional liability limits, often expanding coverage to include claims not fully covered by the base policy. This helps protect the association from hitting its limits quickly when multiple or costly incidents occur, improving financial resilience.

Other options don’t address the risk: reducing the policy term doesn’t raise limits; switching to a property-only policy removes liability protection; ignoring the issue leaves the association exposed to uncovered losses.