11.1 CGL Limits of Insurance and Aggregates

The Six Limits of the CGL

The Commercial General Liability (CGL) Coverage Form is published by the Insurance Services Office (ISO), most commonly the CG 00 01 occurrence form. Its Section III, Limits of Insurance, sets out exactly six limits. The exam tests how each limit interacts, what each caps, and which claim payments erode which aggregate. Memorizing this hierarchy is one of the highest-value tasks in commercial lines study because limit questions appear on nearly every P&C national exam.

The six limits and their typical declared amounts are:

Notice that the Each Occurrence Limit is the most the insurer pays for any single occurrence, no matter how many claimants, claims, or insureds are involved. Splitting one accident into many lawsuits does not multiply the payout.

How the Two Aggregates Differ

The single most-tested distinction is between the two aggregates. The General Aggregate is the cap on total payments during the policy period for: premises-operations bodily injury and property damage (Coverage A), Personal and Advertising Injury (Coverage B), and Medical Payments (Coverage C). Once exhausted, those coverages stop paying even though the policy period continues.

The Products-Completed Operations (P-CO) Aggregate is entirely separate. It caps claims arising from the insured's products after they leave the premises and from completed operations (finished work away from the job site). A claim that erodes the P-CO aggregate does not reduce the General Aggregate, and vice versa.

• General Aggregate exhausted, P-CO untouched: products claims still pay up to $2,000,000.
• P-CO Aggregate exhausted: products/completed-operations claims stop; premises-ops still pay under the General Aggregate.
• Each Occurrence caps any single loss; aggregates cap the policy-period total.

Worked example

A contractor with standard limits ($1M occurrence / $2M General / $2M P-CO) has three losses in one policy year:

• A customer slips at the office (premises-ops): $700,000 paid -> erodes General Aggregate.
• An advertising-injury suit (Coverage B): $600,000 paid -> erodes General Aggregate.
• A defective product injures a user (products): $900,000 paid -> erodes P-CO Aggregate.

General Aggregate used: $700,000 + $600,000 = $1,300,000 of $2,000,000 (so $700,000 remains for premises/B/C). P-CO Aggregate used: $900,000 of $2,000,000. Each payment also stayed under the $1,000,000 Each Occurrence cap, so all three are paid in full.

Now add a fourth loss: a second product claim for $1,400,000. The Each Occurrence cap limits it to $1,000,000, and that $1,000,000 erodes the P-CO Aggregate, bringing P-CO usage to $1,900,000. Only $100,000 of P-CO room remains for the rest of the year, even though the General Aggregate still has $700,000 untouched. This is why exam questions reward tracking each aggregate separately rather than treating the two as one shared bucket.

Damage to Premises Rented and Medical Expense Sublimits

Two small but heavily tested sublimits live inside Coverage A and Coverage C.

The Damage to Premises Rented to You limit (default ~$100,000) is a carve-back from the damage-to-property exclusion. It restores coverage for fire damage to premises the insured rents, and for any-cause damage to premises rented for 7 or fewer consecutive days. The Each Occurrence limit does not increase this sublimit.

The Medical Expense (Coverage C) limit (default ~$5,000 per person) pays reasonable medical costs for injury on the insured's premises or from operations, regardless of fault, if incurred and reported within a set time (generally one year). It is a goodwill, no-fault coverage meant to settle minor injuries before they become liability suits. Payments under Coverage C erode the Each Occurrence limit and the General Aggregate.

Medical Payments does not apply to the named insured, tenants, employees (covered by workers compensation), or anyone injured while taking part in athletics. Because it pays without proving the insured was negligent, adjusters use small Coverage C payments strategically to defuse claims early. On the exam, remember that Coverage C is bodily-injury-only and that its per-person sublimit is independent of the Each Occurrence limit even though its payments draw down that occurrence limit and the General Aggregate.

Other Insurance and the Reinstatement Trap

The CGL Other Insurance condition decides how the policy responds when more than one policy covers a loss. The CGL is generally primary, but becomes excess in defined situations (for example, fire damage covered by a property policy, or coverage as an additional insured on another's policy). When two policies are both primary, they share by the contribution by equal shares method or contribution by limits method.

A classic trap: aggregates do not reset mid-term. Once the General Aggregate is exhausted, the policyholder must buy more coverage or accept the gap until renewal. Aggregates reset only at the start of a new policy period.

• Primary policy pays first up to its limit; excess pays only after primary is exhausted.
• Equal shares: each insurer pays equal amounts until the lower limit is reached, then the other continues.
• The Each Occurrence limit is per occurrence; the aggregate is per policy period and does not reinstate.