11.1 CGL Limits of Insurance and Aggregates

The Six CGL Limits

The Commercial General Liability Coverage Form (ISO CG 00 01, current 04 13 edition) is the backbone of the casualty exam. Section III, Limits of Insurance, lists six distinct dollar limits on the declarations page. Roughly 1 in 6 casualty questions tests how these six limits interact, so memorize the hierarchy below.

How the Limits Feed Each Other

The Each Occurrence limit is the most paid for bodily injury (BI) and property damage (PD) arising from a single occurrence. Every dollar paid under Each Occurrence also reduces the General Aggregate. When the General Aggregate is exhausted, the policy stops paying Coverage A and Coverage B losses (other than products-completed operations) for the rest of the term — no matter how many occurrences remain.

Quick Answer: The Each Occurrence limit caps one loss event; the General Aggregate caps the total of all such events over the whole policy period. Each Occurrence feeds the General Aggregate.

Personal & Advertising Injury (Coverage B) is subject to the Each Occurrence limit AND the General Aggregate, but it is NOT subject to the Each Occurrence limit — Coverage B has its own per-person/per-organization limit that erodes the General Aggregate directly.

Worked Numeric Example

A contractor has a CGL with $1,000,000 Each Occurrence and $2,000,000 General Aggregate. Three separate covered occurrences happen during the year:

• Occurrence 1: $800,000 paid
• Occurrence 2: $1,000,000 paid (capped at the Each Occurrence limit; the actual judgment was $1.3M, so the insured pays the extra $300,000)
• Occurrence 3: claim of $400,000

After Occurrences 1 and 2, the General Aggregate has paid $1,800,000, leaving only $200,000 of the $2,000,000 aggregate. Occurrence 3's $400,000 claim is therefore paid only up to $200,000, even though the $1,000,000 Each Occurrence limit is untouched. The insured absorbs the remaining $200,000. Trap: students assume Each Occurrence is the only ceiling — the General Aggregate is the harder cap once losses pile up.

The Two Aggregates Are Separate

The Products-Completed Operations Aggregate is a distinct bucket. Losses arising from the insured's products after they leave the premises, or from completed work away from the job site, erode this aggregate — never the General Aggregate. This separation protects a manufacturer or contractor: a string of premises-and-operations claims cannot wipe out the limit available for a later product-failure suit.

• General Aggregate: premises/operations, Coverage B, medical payments
• Products-Completed Operations Aggregate: defective products, faulty completed work

Damage to Premises and Medical Payments

Damage to Premises Rented to You (historically Fire Legal Liability) covers fire damage — and, for premises rented for 7 or fewer consecutive days, other perils — to property the insured rents. It defaults to $100,000 per premises and is a carve-out from the standard exclusion for damage to property in the insured's care, custody, or control.

Medical Expense (Coverage C) pays reasonable medical costs for bodily injury on the insured's premises or from its operations, without regard to fault (a goodwill coverage), up to $5,000 per person within typically one year of the accident. It does not apply to the insured, employees, or tenants.

Restoring or Splitting the Aggregate

Because one bad year can exhaust a shared General Aggregate, ISO offers endorsements that protect contractors with many simultaneous jobs:

• CG 25 03 — Designated Construction Project(s) General Aggregate Limit: a separate General Aggregate applies to each named project, so a large loss on Project A leaves Project B's limit intact.
• CG 25 04 — Designated Location(s) General Aggregate Limit: a separate aggregate per location for multi-site operations.

Without these, every covered claim across every job competes for the single $2,000,000 General Aggregate. Trap: the exam describes a contractor with five active sites and one catastrophic loss, then asks how to preserve limits for the other four — the answer is a per-project or per-location aggregate endorsement.

Defense Costs Are Outside the Limits

A defining feature of the standard CGL is that defense costs are paid in addition to the limits of insurance — they do not erode the Each Occurrence or General Aggregate amounts. The insurer's duty to defend continues until the applicable limit is exhausted by payment of judgments or settlements. This contrasts sharply with many professional liability and D&O forms, which use defense-within-limits ("eroding" or "wasting") policies where legal fees consume the limit.

Critical distinction: Standard CGL = defense OUTSIDE limits (defense is extra). Many claims-made E&O/D&O forms = defense INSIDE limits (defense reduces what is left for the judgment). This is a favorite distractor.

Splitting Bodily Injury and Property Damage

The CGL Each Occurrence limit is a combined single limit (CSL) — one dollar amount applies to bodily injury and property damage together for a single occurrence. This differs from a split limit common on personal auto (e.g., 100/300/50), where separate caps apply per person, per accident, and to property damage. Knowing the CGL uses a combined single limit, not split limits, is a frequently tested point because students carry the auto split-limit habit into the casualty section incorrectly.