11.1 CGL Limits of Insurance and Aggregates
Key Takeaways
- The CGL has six distinct limits; the General Aggregate and Products-Completed Operations Aggregate are independent buckets.
- Exhausting one aggregate does not affect the other; products-completed claims still pay up to Each Occurrence even if the General Aggregate is gone.
- Each Occurrence caps any single loss; Damage to Premises and Medical Payments are sublimits inside Each Occurrence.
- Use CG 25 03 (per project) or CG 25 04 (per location) endorsements to keep one job from eroding limits for others.
- Damage to Premises Rented to You is the rare CGL coverage for non-owned property, applying to fire and short-term (7-day) rentals.
How the CGL Limits Section Works
The Commercial General Liability Coverage Form (ISO CG 00 01, current 04 13 edition) does not use a single policy limit. Instead, the Limits of Insurance section (Section III) stacks six interlocking limits that respond to different categories of loss. Exam questions almost always test which limit pays a given claim and how the aggregates erode the limits available for later claims. Memorize the structure, because the wording on the Declarations page ties directly to these defined terms.
The Six CGL Limits
| Limit | What it caps | Resets? |
|---|---|---|
| General Aggregate | Total of most BI/PD, med pay, and Personal & Advertising Injury for the policy period | Per policy period |
| Products-Completed Operations Aggregate | All BI/PD arising from the products-completed operations hazard | Separate per period |
| Each Occurrence | All BI/PD from any one occurrence (subject to aggregates) | Per occurrence |
| Personal & Advertising Injury | All such injury sustained by any one person/organization | Subject to General Aggregate |
| Damage to Premises Rented to You | Fire (and certain perils) damage to one premises rented or occupied | Per premises |
| Medical Payments | Med expense for any one person | Subject to Each Occurrence |
The Two Aggregates Are Independent
The single most-tested concept: the General Aggregate and the Products-Completed Operations Aggregate are separate buckets. A products/completed-operations claim erodes only the products-completed aggregate, not the general aggregate. So an insured can exhaust one and still have the other fully available.
Damage to Premises Rented to You and Medical Payments are sublimits that draw down inside the Each Occurrence limit, which in turn draws down the General Aggregate.
Worked Numeric: Aggregate Erosion
A contractor carries: General Aggregate $2,000,000; Products-Completed Aggregate $2,000,000; Each Occurrence $1,000,000; Damage to Premises $300,000.
- Slip-and-fall in the showroom settles for $1,000,000. This is an Each Occurrence (premises/operations) loss. It pays in full and reduces the General Aggregate to $1,000,000.
- A second showroom occurrence settles for $1,200,000. The Each Occurrence limit caps payment at $1,000,000; the insured eats the extra $200,000. General Aggregate now $0.
- A defective-product injury then occurs. Even though the General Aggregate is exhausted, the Products-Completed Aggregate ($2,000,000) is untouched, so up to $1,000,000 (Each Occurrence) is still available.
A CGL policy has a $2,000,000 General Aggregate and a separate $2,000,000 Products-Completed Operations Aggregate. The insured has already exhausted the General Aggregate on premises liability claims. A bodily injury claim then arises from the products-completed operations hazard. How does coverage respond?
Damage to Premises Rented to You
This sublimit (default $100,000 on the Declarations, but commonly raised to $300,000+) is the one place the CGL covers property the insured does not own. It pays for fire damage to premises rented to the named insured, and for fire/lightning/explosion/smoke/leakage damage to any single premises the insured rents for 7 or fewer consecutive days. It carves back an exception to the general 'damage to property rented to you' exclusion, which is why it is tested alongside the exclusions.
Trap: 'Per Project' and 'Per Location' Aggregates
The standard CGL applies one General Aggregate across all of the insured's projects and locations. Construction contracts often demand a Designated Construction Project(s) General Aggregate (CG 25 03) or a Designated Location(s) General Aggregate (CG 25 04) endorsement so that each project/location gets its own General Aggregate. Without the endorsement, several large claims at one job can wipe out limits needed elsewhere - a classic exam distractor.
Which CGL limit is reduced by a payment for Medical Payments to an injured visitor?
The Six Limits and the Independent Aggregates
The CGL declarations show six limits, and the exam expects you to know what each caps:
| Limit | Caps |
|---|---|
| General Aggregate | Total annual payments for premises/ops, Coverage B, and Coverage C |
| Products-Completed Operations Aggregate | Total annual products/completed-work payments (separate) |
| Each Occurrence | A single occurrence (BI + PD combined) |
| Personal & Advertising Injury | Per person/organization for Coverage B |
| Damage to Premises Rented to You | Fire (and short-term rental) damage to rented premises |
| Medical Expense | Per person under Coverage C |
Worked erosion numeric: Limits are $1M each-occurrence / $2M general aggregate / $2M products aggregate. Mid-year the insurer has paid $1.7M in premises/ops claims. A new products claim of $900,000 is paid from the separate products aggregate (untouched), so it pays the full $900,000. But a new premises occurrence of $600,000 draws on the general aggregate, where only $300,000 remains — so it pays only $300,000. The two aggregates are independent: eroding one does not reduce the other, which is exactly why ISO splits products/completed-operations into its own annual cap.
Damage to Premises Rented, Med-Pay Sublimit, and Per-Location Aggregates
Two sublimits sit beneath the main limits. Damage to Premises Rented to You covers fire damage (and, for premises rented 7 days or fewer, additional perils) to a building the insured rents — a carve-back from the "property you control" exclusion, commonly $100,000. The Medical Expense limit (Coverage C) is a small per-person figure such as $5,000, paid without regard to fault.
By default the General Aggregate applies to all of the insured's locations and projects combined, which is dangerous for a multi-site contractor: claims at one job site can exhaust the aggregate available for every other. Two endorsements fix this:
| Endorsement | Effect |
|---|---|
| Designated Construction Project(s) General Aggregate (CG 25 03) | A separate general aggregate for each project |
| Amendment of Limits / Per Location (CG 25 04) | A separate general aggregate for each premises/location |
Worked example: A contractor with a $2M general aggregate and three active projects faces $1.5M of claims at Project A. Without the per-project endorsement, only $500,000 of aggregate remains for Projects B and C combined. With CG 25 03, each project has its own $2M aggregate, so B and C are unaffected. This is why contractors routinely buy the per-project or per-location endorsement.