11.1 CGL Limits of Insurance and Aggregates
Key Takeaways
- ISO CGL form CG 00 01 carries six interlocking limits; the Each Occurrence limit caps a single loss while the General Aggregate caps total BI/PD, Coverage B, and Med Pay for the policy year.
- The Products-Completed Operations Aggregate is a separate annual bucket so product/completed-work losses cannot drain the limits protecting premises and ongoing operations.
- Standard CGL defense costs are paid outside (in addition to) the limits and do not erode the aggregate, unlike claims-made professional policies where defense is inside the limit.
- Each paid occurrence reduces the relevant aggregate; once an aggregate is exhausted, later claims of that type go unpaid even when the per-occurrence limit is untouched.
- Aggregates do not reinstate mid-term, and courts use the cause test (one continuous condition equals one occurrence) far more than the effect test; a CG 25 03 per-project aggregate gives each job its own limit.
How the CGL Stacks Its Limits
The Commercial General Liability (CGL) coverage form, published by the Insurance Services Office (ISO) as form CG 00 01, does not use one single limit. Instead the Declarations show a tier of six interlocking limits in the Limits of Insurance section (Section III). Exam questions almost always test how a single occurrence draws down more than one of these limits at the same time.
- Each Occurrence Limit - the most paid for the combined bodily injury (BI) and property damage (PD) arising from any one occurrence.
- General Aggregate Limit - the most paid in the policy period for all BI/PD, medical payments, and personal and advertising injury, except losses falling under products-completed operations.
- Products-Completed Operations Aggregate - a separate annual cap for injury arising away from your premises out of your product or completed work.
- Personal and Advertising Injury Limit - a per-person/organization cap (libel, slander, wrongful eviction, etc.).
- Damage to Premises Rented to You - a fire/sublimit, commonly $100,000.
- Medical Payments - a small no-fault limit, commonly $5,000 per person.
Why Two Aggregates Exist
The products-completed operations aggregate is walled off so that a defective-product epidemic cannot exhaust the limits that protect ongoing premises and operations. A claim that erodes one aggregate generally does not erode the other.
A key exam rule: the Each Occurrence Limit is the ceiling for any single loss event, but every paid occurrence also reduces the relevant aggregate. Once an aggregate is gone, later claims of that type are not paid even if the per-occurrence limit looks untouched. Defense costs are normally paid in addition to the limits (outside the limits), so they do not erode the aggregate - a frequent trap versus claims-made professional policies where defense is inside the limit.
Worked Limit-Drawdown Example
Assume Declarations of: Each Occurrence $1,000,000; General Aggregate $2,000,000; Products-Completed Ops Aggregate $2,000,000.
| Event | BI/PD paid | General Agg. remaining | Products Agg. remaining |
|---|---|---|---|
| Slip-and-fall at store | $1,000,000 | $1,000,000 | $2,000,000 |
| Second premises fall | $700,000 | $300,000 | $2,000,000 |
| Defective product, off-site | $900,000 | $300,000 | $1,100,000 |
Notice the off-site product claim drew only from the products aggregate, leaving the general aggregate at $300,000. If a third premises claim of $500,000 then occurred, the insurer pays only the remaining $300,000 general aggregate, even though the $1,000,000 per-occurrence limit was not reached. Memorize: per-occurrence caps a single loss; aggregate caps the year.
Six CGL Limits and How They Interact
The standard CGL declarations show six limits, and the exam expects fluency in how they nest. The General Aggregate caps total payments for most BI/PD, Coverage B, and medical payments in the policy year. The Products-Completed Operations Aggregate is a separate bucket for injury arising from the insured's products or completed work. Within those caps sit the Each Occurrence limit, the Personal & Advertising Injury limit (per person/organization), the Damage to Premises Rented to You limit, and the Medical Payments sublimit.
| Limit | Caps |
|---|---|
| General Aggregate | All Coverage A (except prod/comp ops) + B + C for the year |
| Products-Completed Ops Aggregate | Product/completed-work injuries for the year |
| Each Occurrence | Combined BI + PD from any one occurrence |
| Personal & Advertising Injury | Per person/organization (subject to gen. aggregate) |
| Damage to Premises Rented to You | Fire/limited perils to rented premises (e.g., $100,000) |
| Medical Payments | Per person (e.g., $5,000) |
Worked example: A contractor with a $1M Each Occurrence / $2M General Aggregate / $2M Products-Completed Ops Aggregate has three liability losses in one year of $800,000, $700,000, and $900,000 from ongoing operations. The first two ($1.5M) are paid fully; the third is capped at the remaining $500,000 of the $2M general aggregate, leaving $400,000 unpaid — unless a CG 25 03 per-project aggregate had given each job its own limit. Completed-operations claims would draw on the separate products aggregate, illustrating why two aggregates exist.
A CGL has a $1,000,000 Each Occurrence limit and a $2,000,000 General Aggregate. Earlier premises-operations claims have already reduced the General Aggregate to $400,000. A new covered slip-and-fall produces a $750,000 judgment. How much does the insurer pay?
Under the unendorsed ISO CGL (CG 00 01), how are defense (supplementary payment) costs treated relative to the Limits of Insurance?
Reinstatement and Single vs. Multiple Occurrence
Aggregates generally do not reinstate mid-term; once the policy year resets, fresh aggregates apply. Whether a series of injuries is one occurrence or many changes how many per-occurrence limits apply and how the deductible/retention is counted. Courts use the cause test (one continuous condition equals one occurrence) far more than the effect test (count each injured party). On the exam, repeated exposure to the same harmful condition is treated as a single occurrence.
Key Takeaways
- ISO CG 00 01 carries six limits; the Each Occurrence limit caps a single loss while the General Aggregate caps the whole policy year.
- The Products-Completed Operations Aggregate is separate so product losses cannot drain premises-operations coverage.
- Standard CGL defense costs are paid outside (in addition to) the limits and do not erode the aggregate.
- Each paid occurrence reduces the relevant aggregate; once an aggregate is exhausted, later claims of that type are unpaid even below the per-occurrence limit.
- Aggregates do not reinstate mid-term; the cause test usually decides one-versus-many occurrences.
The CGL spreads its protection across a per-occurrence limit and two separate annual aggregates, plus sublimits for medical payments, rented premises, and personal/advertising injury. Exam success comes from tracking how each loss simultaneously draws down the per-occurrence ceiling and erodes its aggregate, and from remembering that standard CGL defense costs sit outside the limits.