11.1 CGL Limits of Insurance and Aggregates

When a Las Vegas contractor or a Reno manufacturer buys a Commercial General Liability policy, the declarations page lists dollar amounts that look like a simple ceiling — but on the licensing exam and in real claims, those numbers behave like a stack of interacting caps. The Insurance Services Office (ISO) occurrence form CG 00 01 (and the claims-made twin CG 00 02, which uses the same limit structure) organizes coverage through six separate limits and two aggregate buckets that reset each policy period. Misidentifying which bucket a loss erodes is one of the fastest ways to miss a national General Knowledge item on the Nevada Property & Casualty combo exam.

Why Limits Matter Beyond the Declarations Page

Liability insurance does not promise unlimited protection. The insurer's maximum obligation is bounded by the Limits of Insurance section of the CGL. An insured who treats the policy as "we have $2 million of coverage" without understanding aggregates may believe a second million-dollar claim is payable when the General Aggregate was already consumed by earlier losses in the same term. For producers, explaining limit structure is part of suitability — an account with ten construction sites sharing one aggregate needs a different endorsement strategy than a single-location retailer.

The Six ISO CGL Limits

The declarations page lists each amount. Default ISO limits often show Medical Payments at $5,000 per person and Damage to Premises Rented to You at $100,000, but carriers and endorsements may change those figures. Always read the dec page — exam fact patterns usually state the numbers explicitly.

General Aggregate vs. Products-Completed Operations Aggregate

The General Aggregate is the workhorse cap. Slip-and-fall claims on your premises, ongoing operations at a job site, and most routine third-party liability erode this bucket.

The Products-Completed Operations Aggregate is a separate cap for a different risk season:

• Your product — injury or damage after the product leaves your control (defective appliance, contaminated food batch).
• Your completed work — injury or damage after you finish the work (roof leak months after installation).

Exam trap: These aggregates do not share dollars. Exhausting the PCOA on product claims does not reduce the General Aggregate available for a premises fall at your office.

Nevada scenario: A Henderson HVAC installer pays $1,800,000 in completed-operations claims when several rooftop units fail after installation. The PCOA was $2,000,000 — $200,000 PCOA remains. A vendor later slips in the company's warehouse. That premises claim draws against the General Aggregate, which was untouched by the rooftop losses.

The Each Occurrence Limit — Per Event, Not Per Claimant

The Each Occurrence limit is the maximum the insurer pays for all bodily injury and property damage arising out of one occurrence, regardless of how many people are hurt. One explosion injuring twelve bystanders and damaging three storefronts is still one occurrence subject to a single occurrence cap.

Order of operations on exam day:

1. Classify the loss (premises/operations vs. products-completed operations vs. Coverage B/C).
2. Apply the Each Occurrence limit (or the Coverage B per-person cap) to cap the single payment.
3. Subtract that payment from the correct aggregate.
4. Pay Supplementary Payments on top — they do not touch any limit.

Worked Example: Occurrence Cap Beats Aggregate Headroom

Declarations: Each Occurrence $1,000,000; General Aggregate $2,000,000.

A single restaurant fire spreads to a neighboring tenant. Covered bodily injury and property damage from one occurrence total $1,400,000.

• Payment is capped at $1,000,000 by the Each Occurrence limit even though the General Aggregate still shows $2,000,000 available.
• The General Aggregate drops to $1,000,000 for the remainder of the policy period.

The occurrence limit governs one event; the aggregate governs the cumulative season.

Worked Example: Aggregate Exhaustion

Same declarations. Three separate premises occurrences during the year pay $700,000, $600,000, and $650,000.

• Each loss is under the $1,000,000 occurrence cap.
• Cumulative payments = $1,950,000, leaving only $50,000 General Aggregate.
• A fourth premises claim for $200,000 is capped at $50,000 — the aggregate is exhausted even though each individual occurrence limit was never breached.

Sublimits Inside the System

Three limits act as sublimits that further narrow specific coverages:

A $4,000 medical payments claim for a customer who trips in your store reduces Medical Payments capacity for that person and also erodes the General Aggregate. Coverage B offenses (libel, false arrest, etc.) have their own per-person cap before the General Aggregate is touched.

Supplementary Payments Sit Outside the Limits

A frequently tested distinction: under the standard ISO CGL, Supplementary Payments — including defense attorney fees, court costs, prejudgment interest awarded against the insured, and certain bond premiums — are paid in addition to the Limits of Insurance. They do not reduce the Each Occurrence limit or either aggregate.

This is the opposite of many professional liability and some claims-made forms where defense costs are inside the limit and erode the amount available for indemnity. Exam stems that say "defense costs reduce the occurrence limit" are describing a different policy type, not the standard CGL.

Per-Location and Per-Project Aggregates

Because one shared General Aggregate can be wiped out by a catastrophe at a single location, ISO offers endorsements that split the aggregate:

A contractor running simultaneous projects along the I-15 corridor can buy per-project aggregates so a loss at one casino renovation does not consume limits protecting nine other jobsites. When a fact pattern describes multiple locations sharing one aggregate and asks whether a second site remains protected after a large first-site loss, check whether CG 25 03 or CG 25 04 was endorsed.

How Aggregates Reset

CGL aggregates apply per policy period, normally twelve months. When a new policy period begins, aggregates reset to their full declared amounts — unused capacity does not roll forward, and exhausted balances do not carry over.

For policy periods longer than twelve months, ISO language generally treats each twelve-month segment as a separate annual period for aggregate purposes unless endorsed otherwise. A three-year policy should not silently provide one aggregate for thirty-six months of exposure.

Exam Checklist: Five Questions for Every Limit Problem

1. Is this products-completed operations or everything else? (Chooses the aggregate.)
2. How many occurrences are involved? (Each gets its own occurrence cap.)
3. Does any sublimit (medical, fire-legal, PAI) apply before the occurrence limit?
4. After payment, how much aggregate remains?
5. Are defense costs supplementary (CGL) or inside limits (other forms)?

Mastering this sequence prevents the classic error of subtracting a completed-operations payment from the General Aggregate or forgetting that one bad day can cap at the occurrence limit even when the aggregate looks generous.

Memory anchors: six limits · two aggregates that do not share · occurrence per event · defense outside limits on standard CGL · CG 25 03/25 04 split aggregates.