11.1 CGL Limits of Insurance and Aggregates
Key Takeaways
- The CGL uses a six-limit structure; the General Aggregate and the Products-Completed Operations Aggregate are SEPARATE buckets that do not share funds.
- The Each Occurrence limit caps a single occurrence but each payment also draws down whichever aggregate applies; the aggregate is the hard stop.
- Default sublimits: Damage to Premises Rented to You $300,000 per premises, Medical Payments $5,000 per person.
- Defense costs are Supplementary Payments paid IN ADDITION to limits and do not erode them, but the duty to defend ends when the limit is exhausted by payment.
- Medical Payments (Coverage C) is no-fault third-party goodwill coverage and never covers the insured or its employees.
The Six-Limit Structure of the CGL
The Commercial General Liability policy (ISO CG 00 01 04 13) does not carry a single limit. It uses a six-limit structure on the Declarations, and exam questions live and die on how money flows through these limits. Master this table before anything else.
| Limit | What it caps | Resets / shared with |
|---|---|---|
| General Aggregate | Total Coverage A (non-products) + Coverage B + Coverage C paid in the policy year | Annual ceiling for most claims |
| Products-Completed Operations Aggregate | All BI/PD arising from products and completed work | Separate annual ceiling |
| Each Occurrence | Coverage A (BI/PD) + Coverage C per single occurrence | Drawn from an aggregate |
| Personal & Advertising Injury | Coverage B per person/organization | Drawn from General Aggregate |
| Damage to Premises Rented to You | Fire (and limited other perils) damage to rented premises | Default $300,000 any one premises |
| Medical Payments | Coverage C per person | Default $5,000 per person |
The defining feature: the two aggregates are separate buckets. Money paid for products-completed operations does not erode the General Aggregate, and vice versa. This is the single most-tested limits concept on the national P&C exam.
How Each Occurrence Feeds the Aggregates
The Each Occurrence Limit is the most the insurer pays for the combined BI and PD (plus any Medical Payments) of one occurrence, regardless of the number of insureds, claims, or claimants. But every dollar paid under Each Occurrence is also drawn down from an aggregate.
- A non-products occurrence (slip-and-fall on the premises) reduces the General Aggregate.
- A products-completed operations occurrence (food poisoning from a sold product) reduces the Products-Completed Operations Aggregate.
Once an aggregate is exhausted, the policy pays nothing more in that category for the rest of the policy year, even though the Each Occurrence limit still shows a positive number on the Dec page. The aggregate is the hard stop.
Worked Example: Tracking the Aggregates
A contractor carries: Each Occurrence $1,000,000, General Aggregate $2,000,000, Products-Completed Ops Aggregate $2,000,000.
- A visitor trips at the office: court awards $600,000 (non-products). Each Occurrence ($1M) easily covers it. General Aggregate remaining: $2,000,000 - $600,000 = $1,400,000.
- A second premises injury settles for $900,000. Within the $1M occurrence limit. General Aggregate remaining: $1,400,000 - $900,000 = $500,000.
- A defective product the contractor installed causes $1,000,000 in injuries. This is products-completed ops - it draws from that separate $2M aggregate, NOT the depleted General Aggregate. Products-Ops remaining: $1,000,000.
Exam takeaway: even though the General Aggregate is nearly gone, the product claim is paid in full because the two aggregates do not share funds. Mixing them up is the classic wrong answer.
A CGL has a $1,000,000 Each Occurrence limit and a $2,000,000 General Aggregate. During the year the insurer has already paid $1,800,000 in premises (non-products) liability claims. A new covered premises occurrence results in an $800,000 judgment. How much will the insurer pay on this new claim?
Damage to Premises Rented to You and Medical Payments
Two sublimits are carved out of the larger structure and tested heavily:
- Damage to Premises Rented to You - default $300,000 any one premises. It covers fire damage (and, under the 04 13 edition, other named perils for premises rented for 7 or fewer consecutive days) to property the insured rents. It is an exception to the general "damage to property in your care, custody, or control" exclusion. It is per premises, not per occurrence in the aggregate sense.
- Medical Payments (Coverage C) - default $5,000 per person. This is a no-fault, goodwill coverage: it pays reasonable medical expenses for bodily injury to a third party regardless of the insured's legal liability, if the injury occurs on the premises or from the insured's operations and is reported within one year. Coverage C payments draw from the General Aggregate and count against the Each Occurrence limit.
Trap: students confuse Coverage C (third-party Med Pay, no-fault) with workers' compensation (employee injuries) - Med Pay never covers the insured or its employees.
How Defense Costs Interact With Limits
Under the CGL, defense costs are paid in addition to the limits as Supplementary Payments - they do not erode the Each Occurrence limit or the aggregates. This is a key contrast with many professional liability and umbrella forms, where defense is inside (eroding) the limit.
The insurer's duty to defend ends when the applicable limit of insurance has been exhausted by payment of judgments or settlements. So while defense dollars do not reduce limits, paying out the limit terminates the defense obligation. A favorite exam wrinkle: 'Once the insurer pays its policy limit in settlement, does it still have to defend?' Answer: No - the duty to defend ends at limit exhaustion.
Which CGL aggregate is reduced by a bodily injury claim arising from a product the insured manufactured and sold?
The Six CGL Limits and How They Interact
The CGL declarations show six limits: the General Aggregate, the Products-Completed Operations Aggregate, the Personal and Advertising Injury Limit (per person/organization), the Each Occurrence Limit, the Damage to Premises Rented to You (Fire Legal) limit, and the Medical Expense (Coverage C) limit per person. The Each Occurrence limit caps any single occurrence for Coverage A and C combined; the General Aggregate caps the policy-period total for Coverage A (other than products-completed operations), Coverage B, and Coverage C. Knowing which limit caps which loss is the foundation of every CGL limits question.
The Two Separate Aggregates
The most-tested structural feature is the existence of two aggregates. The Products-Completed Operations Aggregate caps all bodily injury and property damage arising out of the insured's products and completed work for the policy period, and it is entirely separate from the General Aggregate, which caps the remaining Coverage A occurrences plus Coverage B and C. This separation means a manufacturer can exhaust its products aggregate without touching its general aggregate, and vice versa. A scenario describing several product-defect claims is testing the products aggregate specifically.
Worked Limit Example
Assume limits of 1,000,000 each occurrence, 2,000,000 general aggregate, 2,000,000 products-completed-operations aggregate, 100,000 fire legal, and 5,000 medical. Three unrelated premises accidents during the year cause 800,000, 900,000, and 700,000 dollars; each is within the 1,000,000 occurrence limit, but their 2,400,000 total exceeds the 2,000,000 general aggregate, so the insurer pays only 2,000,000 for those Coverage A losses, leaving the third claim short by 400,000. A separate product-liability claim of 1,500,000 is paid in full from the untouched 2,000,000 products aggregate.
Fire Legal, Medical, and Limit Reinstatement
The Damage to Premises Rented to You limit (fire legal liability) covers the insured's liability for fire (and, for premises rented for seven days or fewer, certain other perils) damage to premises rented to the insured, a buy-back of part of the care-custody-control exclusion, capped at a low limit such as 100,000 dollars. The Coverage C medical limit applies per person. Aggregates generally do not reinstate during the policy period once exhausted, so an insured that burns through its general aggregate has no further Coverage A/B coverage until renewal unless it buys additional limits.
The exam tests both the fire-legal buy-back and the non-reinstating nature of aggregates.