11.1 CGL Limits of Insurance and Aggregates

The Six-Limit Structure of the ISO CGL

The ISO Commercial General Liability Coverage Form (CG 00 01, current tested edition CG 00 01 04 13) does not use a single policy limit. Instead it stacks six interlocking limits in Section III - Limits of Insurance. On the exam you must know how each limit feeds into the others, and you must be able to read a Declarations page that lists them. The single most common error candidates make is treating the per-occurrence limit as the maximum the policy will pay for the whole year. It is not - the aggregates cap the year.

The six limits, from broadest to narrowest, are:

How the limits interlock

The Each Occurrence Limit is the most a policy pays for the sum of all bodily injury, property damage, and medical payments arising out of any one occurrence - no matter how many claimants are involved. If a single explosion injures 30 people, the $1,000,000 each-occurrence limit caps the total, not $1,000,000 per victim.

Every occurrence payment then erodes the General Aggregate. Once the aggregate is exhausted, the policy pays nothing more for the rest of the policy period even though individual occurrence limits remain unused. This is why a contractor with many small claims can run out of coverage mid-year.

The Products-Completed Operations Aggregate is a separate bucket. Claims that fall in the products-completed operations hazard erode only that aggregate, not the general aggregate, and vice versa. Two independent $2,000,000 ceilings exist.

Worked numeric: aggregate erosion

A print shop carries a standard CGL: $1,000,000 each occurrence / $2,000,000 general aggregate / $2,000,000 products-completed operations aggregate / $100,000 damage to premises / $5,000 medical.

During the year the following Coverage A premises/operations losses are paid:

• Occurrence 1: customer slip-and-fall, $700,000
• Occurrence 2: forklift damages a neighbor's wall, $900,000
• Occurrence 3: another slip-and-fall, $600,000

Each occurrence is within the $1,000,000 each-occurrence cap, so the per-occurrence limit never bites. But the general aggregate is consumed: $700,000 + $900,000 = $1,600,000, leaving $400,000. Occurrence 3 demands $600,000, so the insurer pays only the remaining $400,000 and the insured absorbs the $200,000 shortfall. The products-completed aggregate is untouched - a defective-product claim later that year would still have its full $2,000,000 available because it draws from a different bucket.

How the Six Limits Reset and the Per-Project Aggregate

The interplay of the CGL's limits is high-yield. The General Aggregate caps Coverage A (non-products/completed-operations), Coverage B, and Medical Payments combined; the Products-Completed Operations Aggregate is a separate bucket for injuries arising after work is done or products leave the insured's control. The Each Occurrence Limit caps Coverage A + Coverage C for one occurrence, but cannot exceed the remaining aggregate. Damage to Premises Rented to You (commonly $100,000) and the Medical Expense Limit (commonly $5,000 per person) are sublimits inside the each-occurrence/aggregate structure.

Aggregates reset at each annual renewal — they do not roll over. A contractor exposed to multiple jobsites can buy the Designated Construction Project(s) General Aggregate (CG 25 03) or per-location aggregate (CG 25 04) so that one large claim on one project does not exhaust the protection available to every other project — a common exam fix for the "shared aggregate" trap.

Damage to Premises Rented to You and Medical Payments

The Damage to Premises Rented to You limit (default $100,000) is the most a CGL pays for fire damage - and, for premises rented for 7 or fewer consecutive days, any covered cause - to a building the insured rents or temporarily occupies with the owner's permission. It carves a narrow exception out of the broad damage-to-your-premises and care, custody or control exclusions. The applicable deductible does not apply to this limit. A tenant who burns down the leased building looks to this limit, not Coverage A's full each-occurrence amount.

Coverage C - Medical Payments is no-fault: it pays reasonable medical expenses (default $5,000 per person) for bodily injury to a third party regardless of the insured's legal liability, if the injury occurs on the insured's premises or arises from operations. Because it is no-fault and small, it heads off litigation. Medical payments to one person also erode the each-occurrence limit and the general aggregate.

Aggregate Limits per Location and the trap that follows

When one general aggregate must cover several locations or projects, an endorsement can restore separate aggregates. CG 25 03 - Designated Construction Project(s) General Aggregate Limit and CG 25 04 - Designated Location(s) General Aggregate Limit each give every named project or location its own general aggregate, so a loss at one site does not erode the limit available at another.

Exam trap: candidates assume the general aggregate is per occurrence or unlimited. It is neither - it is the annual ceiling. A second trap: supplementary payments (defense costs, bonds) are paid in addition to the limits and do not erode them, until a limit is exhausted by judgment or settlement. After exhaustion, the insurer's duty to defend ends.