11.1 CGL Limits of Insurance and Aggregates

The Six-Limit Structure of the CGL

The Limits of Insurance section of ISO form CG 00 01 04 13 (Commercial General Liability Coverage Form) is one of the most heavily tested topics on the national P&C portion. The CGL does not have a single limit — it has six interrelated limits that interact in a specific hierarchy. Understanding how a per-occurrence limit feeds the aggregate, and which aggregate applies to which coverage, is essential.

The six limits, from broadest to narrowest, are: the General Aggregate, the Products-Completed Operations Aggregate, the Personal and Advertising Injury Limit, the Each Occurrence Limit, the Damage to Premises Rented to You Limit, and the Medical Expense Limit.

The Six Limits Explained

A classic trap: the Each Occurrence Limit is the most paid for any single occurrence, but multiple occurrences are still subject to the relevant aggregate. Once an aggregate is exhausted, the policy pays nothing more that year even if the per-occurrence limit is unused.

Worked Example: How the General Aggregate Caps Losses

Assume a CGL with these limits:

• Each Occurrence: $1,000,000
• General Aggregate: $2,000,000
• Products-Completed Ops Aggregate: $2,000,000

During the policy year the insured (a non-products premises operation) has three covered occurrences: a $900,000 slip-and-fall, an $800,000 sign-collapse injury, and a $700,000 customer injury. Each is below the $1,000,000 per-occurrence cap, so each is fully payable individually. But the three losses total $2,400,000, which exceeds the $2,000,000 General Aggregate.

The insurer pays $900,000 + $800,000 = $1,700,000 on the first two. The third loss has only $300,000 of General Aggregate remaining ($2,000,000 - $1,700,000), so the insured is responsible for the $400,000 shortfall. This is why high-frequency operations buy umbrella coverage above the CGL.

The Two Separate Aggregates

The CGL provides two distinct annual aggregates that do not borrow from each other:

1. Products-Completed Operations Aggregate — applies to BI and PD that occurs away from premises the insured owns or rents and that arises out of the insured's product or completed work. A roofer's repaired roof that later collapses is a completed-operations loss.
2. General Aggregate — applies to everything else: premises and operations liability under Coverage A, all of Coverage B (Personal & Advertising Injury), and all of Coverage C (Medical Payments).

Because they are separate, exhausting the General Aggregate does not reduce the Products-Completed Operations Aggregate, and vice versa. Exam questions love to ask which aggregate a given loss erodes — always trace whether the injury arose from completed work/product (Products-Comp Ops) or from ongoing premises/operations (General).

Defense Costs and the General Aggregate Limits Endorsement

Under the CGL, Supplementary Payments — including defense costs, prejudgment interest, a bail bond up to $250, and up to $250/day for lost earnings while assisting the defense — are paid in addition to the Limits of Insurance and do not erode them. This is a key distinction from claims-made professional liability and many D&O policies, where defense costs are inside (eroding) the limit.

When one policy covers multiple locations or projects, the CG 25 03 (Designated Construction Project(s) General Aggregate Limit) or CG 25 04 (Designated Location(s) General Aggregate Limit) endorsement gives each project or location its own separate General Aggregate, so a large loss at one site does not deplete protection at the others.

How a Single Occurrence Maps to the Limits

Walk a claim through the CGL limits the way the exam frames it. A customer is injured (bodily injury) and their property damaged in one event: both are paid under the Each Occurrence Limit, and that payment also reduces the General Aggregate. If the injury instead arose from a completed product or finished job, it is paid under the Each Occurrence Limit but erodes the separate Products-Completed Operations Aggregate rather than the General Aggregate.

Two sublimits sit inside the each-occurrence figure: the Personal and Advertising Injury Limit (Coverage B, capped per person/organization and shared with the General Aggregate) and Medical Payments (Coverage C, a small per-person no-fault amount). The Damage to Premises Rented to You limit caps fire (and short-term rental) damage to a leased space. Knowing which aggregate a given loss erodes is the single most-tested CGL skill.

Per-Location and Per-Project Aggregate Endorsements

Because a single shared General Aggregate can be exhausted by losses at one site, leaving other locations unprotected, ISO offers the Amendment of Limits – Per Location (CG 25 04) and Per Project (CG 25 03) endorsements. These give each location or project its own General Aggregate, so a large loss at one job does not strip coverage from the rest. Contractors with multiple simultaneous projects frequently require the per-project endorsement by contract, and the exam tests it as the fix when one project's claims threaten to deplete a company-wide aggregate.