CGL Limits of Insurance and Aggregates

How the ISO CGL Stacks Its Limits

The ISO Commercial General Liability Coverage Form (CG 00 01) is the most heavily tested casualty form on the licensing exam. Its Section III - Limits of Insurance sets a single Declarations page that distributes six limits. Memorize the order, because exam questions test which limit a given loss erodes and which aggregate (if any) caps it. The 2013 edition (CG 00 01 04 13) remains the current widely tested form, and limits have not changed structurally since.

The Six Limits on the CGL Declarations

The Two-Aggregate Structure - The Most Tested Concept

The CGL carries two separate aggregates. The General Aggregate is the most the insurer pays for the sum of damages under Coverage A (except products-completed operations), damages under Coverage B (Personal & Advertising Injury), and medical expenses under Coverage C.

The Products-Completed Operations Aggregate stands entirely apart. Losses arising after the insured's product leaves its hands - or after operations are completed and turned over - erode only that aggregate, never the General Aggregate. The completed-operations 'hazard' is the part of the insured's exposure that lives on after the work is done, and ISO walls it off precisely because those long-tail claims behave differently from day-to-day premises liability.

Why this matters: a contractor could exhaust the General Aggregate from premises slip-and-fall claims yet still have the full Products-Completed Operations Aggregate available for a defective-work claim discovered later. The exam loves the trap that 'once the aggregate is gone, all coverage is gone.' It is not - the two aggregates are independent buckets.

Worked Example - Tracking Aggregate Erosion

A hardware store buys a CGL with: Each Occurrence $1,000,000 / General Aggregate $2,000,000 / Products-Completed Ops Aggregate $2,000,000 / Personal & Adv Injury $1,000,000 / Damage to Premises $100,000 / Med Pay $5,000.

• Slip-and-fall: $600,000 BI -> erodes Each Occurrence and General Aggregate (now $1,400,000 left).
• Advertising-injury suit: $400,000 -> Coverage B, erodes General Aggregate (now $1,000,000 left).
• A customer is injured by a defective tool sold last month: $900,000 -> products-completed ops, erodes the Products-Completed Ops Aggregate only (now $1,100,000), General Aggregate untouched at $1,000,000.

Defense Costs Are Outside the Limit

A bedrock CGL feature: the insurer's Supplementary Payments (Section I, Coverage A, paragraph commonly tested) - including defense costs, attorney fees, bail bonds up to $250, loss of earnings up to $250/day to attend trial, post-judgment interest, and court costs - are paid in addition to the Limits of Insurance. Defense costs do not erode the Each Occurrence Limit or the aggregates. Contrast this with claims-made professional liability forms, which frequently include defense inside the limit ('eroding' or 'wasting' limits).

Damage to Premises Rented to You

The CGL carves back a sliver of the otherwise-excluded 'damage to property you rent' through the Damage to Premises Rented to You limit (default $100,000). It applies to fire on a long-term rental and, under the current form, to a broader list of perils for premises rented for 7 or fewer consecutive days. This is a sub-limit within the Each Occurrence Limit, so it cannot exceed the Each Occurrence amount and is itself capped at the scheduled $100,000.

Medical Payments - Goodwill, No-Fault

Coverage C Medical Payments (default $5,000 per person) pays reasonable medical expenses for bodily injury caused by an accident on the insured's premises or arising from operations, regardless of fault, if expenses are incurred and reported within one year of the accident date. It is a goodwill coverage meant to head off lawsuits.

Med Pay does not apply to the insured, employees (covered by workers comp), tenants, or injuries already covered under Coverage A. It erodes the Each Occurrence Limit and the applicable aggregate. On the exam, remember the contrast with bodily-injury liability: Med Pay pays small medical bills with no proof of negligence, whereas Coverage A requires the insured to be legally liable before a dollar is paid.

How Limits Are Stated on the Declarations

The CGL is written with single limits, not the split limits familiar from personal auto. A $1,000,000 Each Occurrence limit applies to the combined total of bodily injury and property damage from one occurrence, rather than a separate cap for each. When an exam item shows a split format like '$100,000/$300,000/$50,000,' that is an auto liability presentation, not a CGL - a quick way to eliminate distractor answers on limit-structure questions.