Two Aggregates, One Policy: Meridian Concrete's Eroding Capacity
Meridian Concrete & Excavating holds an occurrence-form CGL policy running 07/01/2024 to 07/01/2025 with limits of $1,000,000 each occurrence, $2,000,000 general aggregate, $2,000,000 products-completed operations aggregate, and $5,000 medical expense. On 03/15/2025 the risk manager for Halstead Logistics, owner of a distribution center under construction, calls the broker. Meridian has named Halstead as an additional insured on that project.
The insurer's loss run dated 03/01/2025 shows: $140,000 paid on a slip-and-fall by a visitor at an active Meridian site; $620,000 paid to a warehouse owner for damage caused by a curb pour that failed three months after Meridian finished; and a $300,000 open reserve on a foundation claim from a different project, also arising after Meridian's work was complete.
On 03/10/2025 a tilt-wall panel Meridian poured and erected cracked after curing and fell onto Halstead's stored racking, crushing it ($180,000). Meridian's own panel damage is $60,000. The subcontract requires $1 million per occurrence and $2 million aggregate. The certificate issued in August shows $2 million general aggregate and $2 million products-completed operations aggregate.
1. Which aggregate responds to the tilt-wall loss, how much capacity remains, and what is covered versus excluded on Meridian's policy?
Read the worked answer
First classify the loss. The panel was poured, erected, cured, and put to its intended use, and Meridian's operations at that location were complete. That places the claim inside the products-completed operations hazard, not in ongoing operations. So it draws on the products-completed operations aggregate, and the slip-and-fall draws on the general aggregate. You must not net the two together - they are separate pots.
General aggregate: $2,000,000 less the $140,000 slip-and-fall = $1,860,000 available for ongoing-operations claims.
Products-completed operations aggregate: $2,000,000 less $620,000 paid less $300,000 reserved = $1,080,000 available. The $180,000 racking claim fits within the remaining capacity and within the $1,000,000 each-occurrence limit.
Coverage of the items differs. Damage to the crushed racking is damage to someone else's tangible property, physically injured, so it is covered. Damage to Meridian's own panel is excluded by the damage-to-your-work exclusion, because the panel is the named insured's work and is within the completed-operations hazard - hence the $60,000 is Meridian's own cost. The exclusion barring damage to the particular part of real property being worked on does not apply, because Meridian was not performing operations on the panel when it failed.
2. Halstead's risk manager says, "We're an additional insured, so we have our own $2 million." Evaluate that statement and explain the practical consequence if the completed-operations aggregate is exhausted.
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The statement is wrong, and the error is common and expensive. Additional insured status under a standard endorsement extends the policy's protection to the additional insured for liability arising out of the named insured's operations; it does not purchase additional limits. Halstead shares Meridian's $1,000,000 each-occurrence and $2,000,000 products-completed operations aggregate.
The consequence is staging. If a later claim pushes total completed-operations payments past $2,000,000, coverage is exhausted for everyone, including Halstead. Halstead then stands behind Meridian in the line of claimants, and its uninsured exposure is whatever the contract and state law allow it to recover from Meridian directly - which is precisely the credit risk additional insured status was meant to avoid.
Practical steps for the broker: tell Halstead in writing that the certificate reflects limits, not remaining capacity, and that certificates speak only as of the issue date. Recommend Halstead obtain Meridian's current loss run at each renewal and consider requiring a per-project aggregate endorsement or an owner's protective policy. Note also that the open $300,000 reserve can move; a settlement at $1,200,000 would leave only about $180,000 of completed-operations capacity, which is less than the racking claim.
3. The August certificate showed a $2,000,000 products-completed operations aggregate. Was it wrong? What should the broker do now?
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It was not wrong. The ACORD 25 reports the policy limit, not the unused balance, so $2,000,000 was accurate on the date issued. Certificates are snapshots of what the policy stated at that moment, and they say so on their face - the form expressly is not a contract and confers no rights on the holder. A certificate cannot be updated retroactively to reflect erosion that happened afterward, and reissuing one with a reduced aggregate in the aggregate field would itself be inaccurate, because the field is not a remaining-limits field.
What the broker should do now is disclose in writing, separate from the certificate, that $920,000 of the products-completed operations aggregate is paid or reserved and that roughly $1,080,000 remains, and that this figure can change. Do not quietly reissue the certificate to imply the full limit is intact.
Also review the file for the original certificate request: if Halstead asked for aggregate information at the time, the description-of-operations box should have said so. Going forward, put a renewal procedure in place - loss-run review for every account where a certificate holder is relying on limits, and a note that the certificate holder should verify coverage as of the date it actually relies on it.