CGL Limits of Insurance and Aggregates

The Six Limits on the CGL Declarations

The ISO Commercial General Liability Coverage Form (CG 00 01) is the single most heavily tested commercial-liability form on the national portion. The current edition is CG 00 01 04 13, and the LIMITS OF INSURANCE section (Section III) lists exactly six dollar limits. Memorize all six and how each interacts.

How the Two Aggregates Work Together

The defining feature of the CGL is the dual aggregate. The General Aggregate is the ceiling for premises and operations, personal/advertising injury, and medical payments. Products-completed operations losses do NOT erode the General Aggregate - they erode their own separate Products-Completed Operations Aggregate. This split exists because product and completed-work claims (a defective product injures a consumer months after sale; a roof a contractor finished collapses later) often surface long after the work is done and tend to cluster.

Exam key: Premises/operations + personal/advertising injury + medical payments all drain the General Aggregate. Products and completed operations drain a separate aggregate. A loss to one does not reduce the other.

A Worked Limit-Erosion Example

A contractor carries a typical CGL: Each Occurrence $1,000,000 / General Aggregate $2,000,000 / Products-Completed Operations Aggregate $2,000,000.

• A customer slips on the contractor's office floor (premises) and is awarded $600,000. Paid in full (under the $1M each-occurrence cap). Remaining General Aggregate = $1,400,000. Products aggregate untouched.
• Later, scaffolding falls during a job (operations) injuring a bystander for $900,000. Paid in full. Remaining General Aggregate = $500,000.
• A third premises claim of $800,000 arrives. Only $500,000 is left in the General Aggregate, so the insurer pays $500,000 and the General Aggregate is exhausted.

The insured owes the remaining $300,000 out of pocket.

• A roof the contractor finished last year then collapses (completed operations) for $1,000,000. Even though the General Aggregate is gone, this loss is paid from the untouched $2,000,000 Products-Completed Operations Aggregate - paid in full.

This interplay - one loss type exhausted while the other is fully intact - is the classic CGL aggregate question. The each-occurrence limit caps a single loss; the relevant aggregate caps the year's total for that category.

Defense Costs Are Outside the Limits

A critical CGL feature: under the standard CG 00 01, defense costs (Supplementary Payments) are paid IN ADDITION TO the limits of insurance and do not reduce them. The insurer's duty to defend ends only when it has used up the applicable limit paying judgments or settlements. This contrasts sharply with many professional-liability and claims-made forms where defense is inside the limit ("defense within limits" or "eroding/wasting" limits), shrinking the money available to pay the claim.

Trap: Candidates assume defense always erodes the limit. On the standard occurrence CGL it does NOT - that is what makes the duty-to-defend so valuable.

Supplementary Payments in Detail

Beyond defense counsel, CGL Supplementary Payments (paid in addition to the limit) include: all costs taxed against the insured in a suit, up to $250 for bail bonds, the cost of appeal/release-of-attachment bonds (insurer is not obligated to furnish them), prejudgment interest on the part of a judgment the insurer pays, post-judgment interest on the entire judgment, and reasonable expenses the insured incurs assisting the insurer (up to $250 a day for lost earnings). These dollar figures are testable trivia.

Personal & Advertising Injury (Coverage B) Has Its Own Limit

Coverage B responds to a defined list of offenses - false arrest, malicious prosecution, wrongful eviction, slander/libel, oral or written disparagement, copyright/slogan/title infringement in advertising, and use of another's advertising idea. Its limit is stated per person or organization and erodes the General Aggregate, not the each-occurrence limit. Note that Coverage B injuries are offenses, not occurrences - so the each-occurrence limit does not apply to them.

Medical Payments (Coverage C) - No-Fault, Small Limit

Coverage C pays reasonable medical expenses for bodily injury caused by an accident on premises the insured owns/rents or arising from operations, regardless of fault, typically within one year of the accident date. The limit is small (commonly $5,000-$10,000 per person) and is a goodwill/early-settlement device that can head off a larger Coverage A liability claim. It does not apply to the insured, employees, tenants, or anyone injured by the insured's products/completed operations.