11.1 CGL Limits of Insurance and Aggregates
Key Takeaways
- The CGL contains six limits; the standard small-business defaults are $2M General Aggregate, $2M Products-Completed Ops Aggregate, $1M Personal & Advertising Injury, $1M Each Occurrence, $300K Damage to Premises Rented, and $5K Medical Payments per person.
- Each loss is first capped by the Each Occurrence limit, then deducted from the applicable aggregate; once an aggregate is exhausted no further losses of that type are paid.
- The General Aggregate and the Products-Completed Operations Aggregate are separate buckets - product/completed-work losses do not erode the General Aggregate.
- Damage to Premises Rented to You ($300K) is a sublimit within the Each Occurrence limit, not an additional sum, and is fire-only for premises rented 7 days or fewer.
- Coverage C Medical Payments and Coverage B Personal & Advertising Injury both reduce the General Aggregate.
The Six-Limit Structure of the CGL
Every Commercial General Liability policy written on ISO form CG 00 01 contains a Section III "Limits of Insurance" that establishes six separate dollar amounts. Exam questions almost always test how these interact, because a single occurrence can draw on several limits at once. The six limits are: the General Aggregate, the Products-Completed Operations Aggregate, the Personal & Advertising Injury Limit, the Each Occurrence Limit, the Damage to Premises Rented to You Limit, and the Medical Payments Limit.
Memorize the standard ISO default amounts shown on the declarations of most small-business CGLs:
| Limit | Typical ISO Default | What it caps |
|---|---|---|
| General Aggregate | $2,000,000 | Total Coverage A (non-products) + Coverage B + Coverage C for the policy period |
| Products-Completed Operations Aggregate | $2,000,000 | Coverage A BI/PD arising out of products/completed work |
| Personal & Advertising Injury | $1,000,000 | All Coverage B injury to any one person/org |
| Each Occurrence | $1,000,000 | Coverage A + Coverage C combined, per occurrence |
| Damage to Premises Rented to You | $300,000 | Fire (and now most perils) damage to premises rented to/temporarily occupied by insured |
| Medical Payments | $5,000 | Coverage C, per person |
How the Each Occurrence and Aggregate Limits Interact
The Each Occurrence Limit is the most the insurer pays for the sum of all Coverage A (BI and PD) damages and Coverage C (medical payments) arising from any one occurrence, regardless of the number of claimants. The aggregates then cap the total the insurer will pay over the entire policy period, no matter how many occurrences.
The order of operations is critical: each loss is first subject to the Each Occurrence Limit, and the amount paid is then subtracted from the applicable aggregate. Once an aggregate is exhausted, no further losses of that type are paid even if individual occurrences are well within the Each Occurrence Limit.
Worked Example: Multiple Occurrences Against the Aggregate
A contractor carries a CGL with a $1,000,000 Each Occurrence limit and a $2,000,000 General Aggregate. During the policy year three separate (non-products) liability occurrences happen:
- Occurrence 1: court awards $1,300,000 in BI damages
- Occurrence 2: court awards $800,000 in PD damages
- Occurrence 3: court awards $400,000 in BI damages
Step 1 - apply Each Occurrence: Occurrence 1 is capped at $1,000,000 (the $300,000 excess is uninsured). Occurrence 2 pays $800,000. Occurrence 3 pays $400,000.
Step 2 - apply the General Aggregate: Running total = $1,000,000 + $800,000 = $1,800,000 after the first two. Only $200,000 of aggregate remains for Occurrence 3, so the insurer pays $200,000 of that $400,000 claim. Total insurer payment for the year = $2,000,000; the insured personally absorbs $300,000 + $200,000 = $500,000.
A CGL has a $1,000,000 Each Occurrence limit and a $2,000,000 General Aggregate. After paying a $1,000,000 occurrence and an $800,000 occurrence earlier in the year, a third (non-products) occurrence results in a $400,000 judgment. How much does the insurer pay on the third claim?
Two Aggregates, Two Buckets
A frequent trap: the Products-Completed Operations Aggregate is a separate bucket from the General Aggregate. BI/PD arising from the insured's products or completed operations (work finished and turned over) erodes only the Products-Completed Ops Aggregate; everything else (premises/ongoing operations, Coverage B, Coverage C) erodes the General Aggregate.
This means a business could exhaust its $2,000,000 General Aggregate on slip-and-fall claims yet still have the full $2,000,000 Products-Completed Operations Aggregate intact for a defective-product claim. Coverage B Personal & Advertising Injury losses also reduce the General Aggregate.
Damage to Premises Rented to You
The Damage to Premises Rented to You limit ($300,000 default, replacing the older "Fire Legal Liability" $100,000 sublimit) is a carve-out within the Each Occurrence limit - it is not an additional amount. It covers PD by any cause to premises the insured rents long-term, but limits coverage to fire for premises rented for 7 or fewer consecutive days. The contractual liability exclusion is waived only for this rented-premises exposure under a written tenancy.
Why Increased Aggregates Matter
The default $2,000,000 aggregates can be inadequate for active contractors or high-traffic businesses, so producers routinely quote higher aggregates or layer an umbrella/excess policy above the CGL. Remember the order in a loss: the primary CGL pays up to its Each Occurrence and aggregate limits first, and the umbrella then drops down to pay excess amounts once the underlying limit is exhausted. Aggregates restore at each renewal - they are annual caps, not per-policy-lifetime caps - so a fresh $2,000,000 General Aggregate is available each new policy term, a point candidates frequently miss on timeline questions.
Which CGL loss erodes the Products-Completed Operations Aggregate rather than the General Aggregate?
The Two Aggregates and Which Losses Erode Each
The CGL carries two annual aggregates. The Products-Completed Operations Aggregate caps all bodily-injury/property-damage losses falling in the products-completed operations hazard (injuries away from premises from the insured's product or finished work). The General Aggregate caps everything else — premises/operations Coverage A losses, Coverage B personal/advertising injury, and Coverage C medical payments.
A products loss erodes only the products aggregate, leaving the General Aggregate intact, and vice versa. The exam routinely asks which aggregate a given loss reduces — a completed-roof failure hits products-completed operations, while a customer's slip on the premises hits the General Aggregate.