11.1 CGL Limits of Insurance and Aggregates

The Six Limits of the ISO CGL

The standard Commercial General Liability policy is the ISO CG 00 01 Coverage Form (current 04 13 edition). Its Declarations list six separate Limits of Insurance, and exam questions live in how they interact. Memorize this table cold — the relationship between the per-occurrence limits and the two aggregates is one of the single most heavily tested topics on the national P&C portion.

Reading the order of operations

The Each Occurrence limit is applied first; whatever it pays then erodes the applicable aggregate. The aggregate is the annual ceiling for the whole policy period — once exhausted, the per-occurrence limit becomes meaningless because there is no aggregate left to draw from.

How the Each-Occurrence Limit Works

The Each Occurrence limit is the most the insurer will pay for the sum of all bodily injury and property damage arising out of one occurrence, regardless of:

• the number of persons injured,
• the number of claims made or suits brought, or
• the number of insureds named.

Worked example (single occurrence, multiple claimants). A warehouse explosion injures four customers, producing four separate lawsuits totaling $1,400,000. The policy carries a $1,000,000 Each Occurrence limit. Because all four injuries arise from one occurrence, the insurer pays $1,000,000 total — not $1,000,000 per claimant. The insured is personally exposed for the remaining $400,000. This is the classic trap: candidates wrongly multiply the limit by the number of claimants.

Worked example (BI + PD combined). A single fire causes $750,000 bodily injury and $500,000 property damage = $1,250,000 from one occurrence. With a $1,000,000 Each Occurrence limit the insurer pays $1,000,000; BI and PD share the same per-occurrence pool, they do not each get a separate $1,000,000.

Which Aggregate Does a Claim Erode?

The CGL has two aggregates, and matching a claim to the correct one is a near-certain exam item. Premises-operations, Coverage B, and Coverage C all draw down the General Aggregate. Products and completed-operations claims draw down the separate PCOH Aggregate — they never touch the General Aggregate.

Aggregate-erosion worked example

A contractor's CGL has a $2,000,000 General Aggregate and a $2,000,000 PCOH Aggregate, each with a $1,000,000 Each Occurrence limit. During the year three slip-and-fall claims on jobsites pay $1,000,000, $700,000, and $600,000 = $2,300,000. The General Aggregate caps premises-ops payouts at $2,000,000, so the third claim is shorted $300,000. Meanwhile a separate products-defect claim of $900,000 pays in full — it erodes only the untouched $2,000,000 PCOH Aggregate. Two separate buckets, two separate ceilings.

Supplementary Payments — Paid On Top of the Limits

A frequently missed point: Supplementary Payments are paid in addition to the Limits of Insurance, not subtracted from them. They include:

• all expenses the insurer incurs (defense costs are outside the limits under the CGL),
• the cost of bail bonds up to $250 (the insurer is not obligated to furnish the bond),
• the cost of appeal bonds and bonds to release attachments,
• reasonable expenses the insured incurs at the insurer's request, including up to $250 a day for lost earnings, and
• post-judgment interest.

Trap: because defense and these costs sit outside the limit, a $1,000,000 Each Occurrence limit can result in the insurer paying $1,000,000 indemnity plus legal defense — total outlay exceeds the stated limit. Compare this with a defense-within-limits (eroding/wasting) form, common in professional liability, where defense costs reduce the limit.

The Six Limits and Which Aggregate a Claim Erodes

The ISO CGL declarations show six limits the exam expects you to rank: 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 (commonly $100,000), and the Medical Expense (any one person) limit (commonly $5,000). A bodily-injury or property-damage claim erodes the Each-Occurrence Limit first, then the General Aggregate — unless the loss arises from the insured's product or completed work, in which case it erodes the separate Products-Completed Operations Aggregate.

Personal-and-advertising-injury losses erode the General Aggregate, not the products aggregate.

Why Two Aggregates Exist and How They Reset

Two separate aggregates exist because products and completed-operations claims (a defective component fails years after sale) are long-tail and could otherwise exhaust the same bucket that pays ordinary premises and operations claims. Keeping them separate preserves limits for both exposures.

Aggregates reset each annual policy period, so a multi-year claim history is measured one policy year at a time. Supplementary payments — defense costs, bonds, post-judgment interest, and up to a daily amount for the insured's lost earnings while assisting the defense — are paid in addition to the limits and do not erode them, which is a recurring exam contrast with the eroding limits in some professional-liability forms.