11.1 CGL Limits of Insurance and Aggregates

The Six Limits of the CGL

The standard ISO Commercial General Liability form, CG 00 01 04 13 (occurrence) or CG 00 02 (claims-made), declares six distinct Limits of Insurance. The exam tests how each limit interacts with the two aggregates, so commit the structure below to memory before working numeric problems.

The two aggregates are separate pools that do not borrow from each other. Premises-operations losses erode the General Aggregate; products and completed-work losses erode the PCOH Aggregate. This separation is the single most heavily tested concept in CGL limits.

How the Each-Occurrence Limit Works

The Each Occurrence limit is the most the insurer pays for all bodily injury and property damage arising from a single occurrence, regardless of:

• the number of persons injured,
• the number of claims or suits filed, or
• the number of insureds involved.

Worked example. A single fire causes $500,000 of third-party property damage plus $750,000 of bodily injury - $1,250,000 total from one occurrence. With a $1,000,000 Each Occurrence limit, the insurer pays $1,000,000; the remaining $250,000 is uninsured. The occurrence limit caps the loss no matter how the dollars split between BI and PD.

Multi-claimant trap. A warehouse explosion injures four customers, producing four suits totaling $1.4 million. Because one explosion is one occurrence, the most payable is the $1,000,000 Each Occurrence limit - not $1.4 million and not $250,000 per person. The number of victims never multiplies the per-occurrence cap.

Which Aggregate Does a Claim Erode?

This table is the most useful exam tool in the section. For each claim, identify the per-claim limit and which aggregate (if any) it drains.

Critical note: defense costs are supplementary payments paid in addition to the limits, so they do not erode any limit or aggregate. Settlements and judgments come from the limits; attorney fees, court costs, and expert witnesses do not.

The CGL Limits Structure

The CGL uses a six-limit structure the exam expects you to navigate from the bottom up:

• Each Occurrence Limit — the most paid for all BI and PD from any one occurrence (combining Coverage A and Coverage C medical payments for that occurrence).
• Damage to Premises Rented to You Limit — a sublimit (commonly $100,000) for fire (and certain other) damage to premises the insured rents or temporarily occupies, carving back the "property you control" exclusion.
• Medical Expense Limit — the per-person Coverage C cap.
• Personal and Advertising Injury Limit — the most for all such injury to any one person or organization.
• General Aggregate Limit — the most paid for the sum of Coverage A (premises/ops), Coverage B, and Coverage C in the policy period.
• Products-Completed Operations Aggregate — a separate cap for products/completed-operations claims, not reduced by other losses.

How the Aggregates Erode and Reinstate

The interaction between the per-occurrence limit and the two aggregates is a favorite exam topic. Each covered occurrence is first capped at the Each Occurrence Limit; the amount paid then erodes the applicable aggregate. Premises/operations and personal-injury payments draw down the General Aggregate; products-completed operations payments draw down the separate Products-Completed Operations Aggregate.

Once an aggregate is exhausted, no further claims of that type are paid for the rest of the policy period even though individual occurrences are within the per-occurrence limit — the aggregates do not automatically reinstate.

A worked example: with a $1,000,000 each-occurrence limit and a $2,000,000 general aggregate, three separate $1,000,000 premises/operations losses would pay $1,000,000, $1,000,000, and then $0 on the third (the general aggregate is exhausted after two) — but a products-completed operations claim that same period would still be paid from its separate aggregate. The Damage to Premises Rented to You sublimit and the per-person personal-injury limit sit inside this structure. Recognizing that defense costs are outside these limits, while indemnity payments erode the aggregates, ties the limits topic together.

How the General Aggregate Can Be Exhausted Mid-Term

The General Aggregate is the total the insurer will pay for all eligible premises-operations, Coverage B, and Coverage C claims during the policy period, and it can be used up before the policy expires. Once exhausted, no further such claims are paid until renewal - even though the policy is still technically in force.

Worked example. A business with a $2,000,000 General Aggregate suffers three covered slip-and-fall judgments of $800,000 each in one policy year - $2,400,000 total. The insurer pays only $2,000,000; the final $400,000 is uninsured because the aggregate is exhausted. Meanwhile, the PCOH Aggregate is untouched, so a separate product-injury claim that same year could still be paid up to its own $2,000,000. This is exactly why the two pools are kept separate: a run of premises claims cannot drain the protection reserved for product losses, and vice versa.

Common Limit Packages and Per-Project/Per-Location Aggregates

Declarations pages typically pair the Each Occurrence limit with a General Aggregate set at twice the occurrence amount.

Contractors and multi-site businesses often modify the single shared General Aggregate so one bad project or location cannot drain protection for the others:

• CG 25 03 - Per Project Aggregate: a separate General Aggregate applies to each construction project.
• CG 25 04 - Per Location Aggregate: a separate General Aggregate applies to each described premises.

These endorsements multiply aggregate protection and appear frequently in contractor and real-estate fact patterns. A general contractor with five active projects under CG 25 03 effectively has five separate $2,000,000 General Aggregates rather than one shared pool.