CGL Limits of Insurance and Aggregates

How the CGL Limits Section Works

The Commercial General Liability Coverage Form is ISO form CG 00 01 (the current widely used edition is CG 00 01 04 13). Section III - Limits of Insurance is one of the most heavily tested areas on the national portion because it controls how much the insurer pays and how separate limits interact. Six limits are shown on the declarations, and the form explicitly states they are the most the insurer pays "regardless of the number of insureds, claims made or suits brought, or persons or organizations making claims."

The six limits are: General Aggregate, Products-Completed Operations Aggregate, Personal and Advertising Injury, Each Occurrence, Damage To Premises Rented To You, and Medical Expense. Knowing which limit caps which loss, and how the two aggregates work, separates passing scores from failing ones.

The Six CGL Limits

The Each Occurrence limit is the ceiling that feeds into both aggregates - any single loss can never exceed it even if the aggregate has plenty of room left.

How the Two Aggregates Cap the Year

The General Aggregate is the most the insurer will pay during the policy period for the sum of: Coverage A bodily injury and property damage (except products-completed operations), Coverage B personal and advertising injury, and Coverage C medical payments. Once exhausted, the policy stops paying those losses even though individual Each Occurrence limits remain.

The Products-Completed Operations Aggregate is a separate annual cap that applies only to losses arising out of the named insured's products after they leave the premises or work that has been completed or abandoned. Because it is separate, a manufacturer can exhaust its products aggregate without touching the general aggregate, and vice versa. Examiners love questions that test whether a given loss draws from the general aggregate or the products-completed operations aggregate.

Worked Example - How Multiple Losses Erode Limits

Assume Each Occurrence $1,000,000, General Aggregate $2,000,000, Products-Completed Operations Aggregate $2,000,000. During the year a contractor has:

• Loss 1: A scaffold collapse on a job injures a passerby - $900,000. This is premises/ongoing operations, so it draws from the General Aggregate (within the $1M Each Occurrence). General Aggregate remaining: $1,100,000.
• Loss 2: Faulty wiring the contractor installed last year burns a finished building - $1,500,000. This falls in the products-completed operations hazard. It is capped at the $1,000,000 Each Occurrence limit, paid from the Products-Completed Operations Aggregate. The $500,000 excess is uninsured under this policy. Products aggregate remaining: $1,000,000.
• Loss 3: A second premises injury - $1,200,000. Capped at $1,000,000 Each Occurrence; only $1,100,000 of General Aggregate remained, so the insurer pays $1,000,000 and General Aggregate remaining is $100,000.

This demonstrates two traps: the Each Occurrence limit caps each loss before the aggregate is even consulted, and ongoing-operations losses never reduce the products aggregate.

Damage To Premises Rented To You and the Medical Expense Trap

Damage To Premises Rented To You (formerly "Fire Legal Liability") covers the insured's liability for damage to premises rented to the insured, and for fire damage to premises temporarily occupied (7 days or fewer). It is a sub-limit inside the Each Occurrence limit, not in addition to it. On CG 00 01 04 13 it responds to fire, lightning, or explosion for short-term occupancy and to broader perils for rented premises.

Medical Expense (Coverage C) is a no-fault, goodwill coverage paying reasonable medical costs incurred within one year of the injury date, regardless of the insured's legal liability. It does NOT apply to any insured, a person hired to do work for the insured, or injury arising from the products-completed operations hazard. A classic exam trap: medical payments are paid even when the insured is not negligent, but they erode the Each Occurrence limit.

The Six-Limit CGL Structure and How a Claim Erodes It

The CGL declarations show six limits the exam expects you to rank. The General Aggregate is the most the insurer pays in the policy period for the sum of Coverage A (other than products-completed-operations), Coverage B, and Coverage C medical payments. The separate Products-Completed-Operations Aggregate caps all bodily-injury and property-damage claims arising from the insured's products and completed work.

Beneath the aggregates sit the Each-Occurrence limit (the most for any one occurrence, covering both A and C), the Personal and Advertising Injury limit (per person/organization, eroding the general aggregate), the Damage to Premises Rented to You (fire legal) limit, and the Medical Payments per-person limit.

The tested mechanic is erosion. Each occurrence payment reduces the applicable aggregate, so once the general aggregate is exhausted, no further Coverage A (non-products) claim is paid even if the each-occurrence limit would otherwise allow it. Worked example: a policy with a $1,000,000 each-occurrence / $2,000,000 general aggregate that pays $1,000,000 on each of two separate occurrences has exhausted the general aggregate and pays nothing on a third non-products occurrence. Defense costs, by contrast, are outside the limits and do not erode them — a recurring distractor.