11.1 CGL Limits of Insurance and Aggregates

How the CGL Limits Section Works

The Commercial General Liability Coverage Form (ISO CG 00 01 04 13) is the single most-tested commercial form on the P&C national exam. Its Limits of Insurance section (Section III) is deceptively simple on the page but generates a large share of exam questions because six separate limits interact. Memorize the structure: there is one Each Occurrence Limit, then several sub-limits that erode out of (or cap) that occurrence limit, and finally two aggregate limits that cap total annual payouts.

The six limits in CG 00 01 are: General Aggregate, Products-Completed Operations Aggregate, Personal & Advertising Injury, Each Occurrence, Damage to Premises Rented to You, and Medical Expense. Knowing which limit responds to which loss is the core skill.

The Six Limits and Their Relationships

The Each Occurrence Limit is the most a policy pays for the sum of damages plus medical payments arising from any one occurrence. The Personal & Advertising Injury limit applies per person/organization. Two sub-limits sit inside the Each Occurrence Limit: Damage to Premises Rented to You (fire legal liability, default $100,000, applies to the first premises you damage by any cause for tenant-occupancy of 7 days or fewer, and by fire for longer leases) and Medical Expense (default $5,000 per person, no-fault, paid regardless of liability).

The Two Aggregates - The #1 Exam Trap

The General Aggregate caps everything except products-completed operations. The Products-Completed Operations Aggregate is a separate bucket for bodily injury and property damage arising out of your product after it leaves your control, or your work after it is completed. The classic trap: a claim that exhausts the General Aggregate does not reduce the Products-Completed Operations Aggregate, and vice versa.

Note also that Damage to Premises Rented and Medical Expense payments reduce the General Aggregate; but for many years on legacy forms Med Pay did not erode the aggregate - on the current CG 00 01 04 13 it does. Watch the edition date in the question.

Worked Numeric: Aggregate Exhaustion

A contractor carries the standard limits above. During the policy year three liability claims close: Claim A (premises slip-and-fall) pays $700,000; Claim B (advertising injury) pays $600,000; Claim C (a finished roof collapses after the job is complete) pays $1,000,000.

• Claim A and Claim B both arise from ongoing operations / personal-advertising injury, so they draw on the General Aggregate: $700,000 + $600,000 = $1,300,000 used, leaving $700,000.
• Claim C is a completed-operations loss, so it draws on the Products-Completed Operations Aggregate ($2,000,000), leaving $1,000,000 in that bucket.

Because Claim C does not touch the General Aggregate, the insured still has $700,000 of General Aggregate available for future ongoing-operations claims. Each per-occurrence payout was also tested against the $1,000,000 Each Occurrence limit - Claim C exactly hit it.

The Six CGL Limits and How They Interact

The CGL declarations list six limits: (1) General Aggregate (caps all Coverage A non-products claims plus all Coverage B and Medical Payments for the period); (2) Products-Completed Operations Aggregate (a separate cap for products/work claims); (3) Personal & Advertising Injury Limit (per person/organization); (4) Each Occurrence Limit (the most for any one occurrence, BI + PD combined); (5) Damage to Premises Rented to You (fire legal, typically $100,000); and (6) Medical Payments (per person, often $5,000).

The Each Occurrence limit feeds claims up to whichever aggregate applies, then payment stops.

Worked Aggregate-Exhaustion Numeric

A contractor has $1,000,000 each occurrence / $2,000,000 general aggregate / $2,000,000 products-completed aggregate. During the year three covered premises/operations occurrences settle for $800,000, $900,000, and $700,000.

The first two total $1,700,000; the third would bring the general aggregate to $2,400,000, but the general aggregate caps at $2,000,000, so only $300,000 of the third claim is paid and the insured is out of pocket $400,000. Crucially, a products-completed claim that same year would still be covered under its separate $2,000,000 aggregate — the two aggregates do not borrow from each other, which is the exam's headline trap.

Restoring Aggregates and the Damage-to-Premises Limit

Two more limit facts the exam tests. The general aggregate and products-completed operations aggregate do not restore mid-term; once exhausted, coverage stops until renewal (some forms add a per-location or per-project aggregate by endorsement to give each site its own cap).

The Damage to Premises Rented to You limit (formerly fire legal liability, default $100,000) is a carve-back that covers the insured's liability for fire damage to rented premises despite the care-custody-control exclusion. Medical Payments is a small no-fault per-person limit that erodes the general aggregate, so paying many small Med-Pay claims can shrink the pool available for a large liability judgment.