11.1 CGL Limits of Insurance and Aggregates
Key Takeaways
- The ISO Commercial General Liability Coverage Form (CG 00 01) carries six interlocking limits, not one flat number.
- Each Occurrence Limit caps a single loss; the General Aggregate caps all covered losses in the policy period except products-completed operations.
- The Products-Completed Operations Aggregate is a separate annual cap for off-premises completed-work and product claims.
- Per Location and Per Project endorsements (CG 25 04, CG 25 03) multiply the General Aggregate so one big loss does not exhaust coverage for the whole account.
- Damage To Premises Rented To You and Medical Payments are sublimits that erode inside the Each Occurrence Limit.
The six limits on the CGL declarations
The Insurance Services Office (ISO) Commercial General Liability Coverage Form (CG 00 01) does not have a single limit. The declarations page lists six separate limits that interact. Memorizing the hierarchy is the single highest-yield CGL skill on the national exam.
| Limit | What it caps |
|---|---|
| General Aggregate | All Coverage A (except products-completed) + Coverage B + Coverage C, per policy period |
| Products-Completed Operations Aggregate | All bodily injury/property damage from products and completed work |
| Personal & Advertising Injury Limit | Any one person or organization, Coverage B |
| Each Occurrence Limit | Any one occurrence, combined Coverage A + Coverage C |
| Damage To Premises Rented To You | One premises, fire/other perils per policy editions |
| Medical Payments | Any one person, Coverage C |
Each Occurrence vs. the aggregates
The Each Occurrence Limit is the most a policy pays for the sum of damages under Coverage A (Bodily Injury and Property Damage Liability) and Coverage C (Medical Payments) arising from one occurrence. The General Aggregate is the most the policy pays in total during the policy period for everything except products-completed operations losses.
Think of the aggregate as a draining bucket. Each occurrence payment is subtracted from the aggregate. When the bucket empties, the policy stops paying even though individual occurrence limits remain on paper.
Worked example: aggregate erosion
A contractor carries $1,000,000 Each Occurrence and $2,000,000 General Aggregate.
- Occurrence 1 pays $1,000,000 (hits the per-occurrence cap).
- Occurrence 2 pays $700,000.
- Remaining General Aggregate = $2,000,000 minus $1,700,000 = $300,000.
If a third unrelated occurrence causes $900,000 in damages, the policy pays only the $300,000 left in the aggregate even though the Each Occurrence Limit is $1,000,000. The aggregate, not the occurrence limit, controls the tail end of a bad year.
The Products-Completed Operations Aggregate runs on its own track. Products and completed-work losses never erode the General Aggregate, and vice versa.
A CGL policy has a $1,000,000 Each Occurrence Limit and a $2,000,000 General Aggregate. Earlier claims have already paid $1,800,000 of covered, non-products losses this period. A new occurrence causes $600,000 of bodily injury. How much does the policy pay for the new occurrence?
Sublimits that erode the occurrence limit
Two limits sit inside the Each Occurrence Limit rather than beside it:
- Damage To Premises Rented To You covers property damage to premises the insured rents, including fire legal liability. The default is often $300,000.
- Medical Payments (Coverage C) is a no-fault, goodwill coverage, commonly $5,000 to $10,000 per person, paid without proving the insured was negligent.
Both amounts are part of, not added to, the Each Occurrence Limit. A $50,000 Medical Payments payout reduces what remains under that occurrence for liability damages.
Trap: candidates assume Medical Payments stacks on top of the occurrence limit. It does not.
Restoring aggregates: Per Location and Per Project
A single General Aggregate is dangerous for an insured with many sites or jobs because one severe loss can exhaust coverage for the entire account. Two ISO endorsements fix this:
- Amendment of Limits of Insurance - Per Location (CG 25 04) gives a separate General Aggregate to each described location.
- Designated Construction Project(s) General Aggregate Limit (CG 25 03) gives each designated project its own General Aggregate.
Worked example
A builder with five active projects carries a $2,000,000 General Aggregate and adds CG 25 03. A catastrophic loss on Project A consumes the full $2,000,000 for that project. Projects B through E each still have their own fresh $2,000,000 aggregate. Without the endorsement, the single $2,000,000 cap would have been shared and likely exhausted across all five.
| Feature | Without endorsement | With CG 25 03 / CG 25 04 |
|---|---|---|
| Number of General Aggregates | One, shared | One per project / location |
| Effect of one large loss | Can exhaust whole account | Isolated to that project / location |
An insured operates retail stores at eight locations and wants assurance that a severe liability loss at one store will not exhaust liability coverage for the other seven. Which endorsement best accomplishes this?
The Six CGL Limits
The CGL is not one number; CG 00 01 layers six interlocking limits that the exam expects you to rank:
| Limit | What It Caps |
|---|---|
| Each Occurrence | The most for any one occurrence (BI + PD combined) |
| General Aggregate | All Coverage A (ex products), B, and C losses for the year |
| Products-Completed Operations Aggregate | A separate annual cap for completed-work/product claims |
| Personal & Advertising Injury | The most for any one person/organization under Coverage B |
| Damage to Premises Rented to You | Fire (and short-term rental) damage to rented premises |
| Medical Payments | Per-person no-fault medical sublimit |
The General Aggregate can exhaust before any single Each-Occurrence limit is reached if many smaller claims accumulate, leaving an insured uncovered late in the policy year.
Separating Products-Completed Operations and Multiplying Aggregates
The Products-Completed Operations Aggregate is deliberately separate from the General Aggregate so that a flood of product or completed-work claims does not consume the limits needed for ongoing premises-and-operations claims, and vice versa. A claim involving a product after it has left the insured's possession, or work after it is completed, erodes this separate aggregate rather than the General Aggregate.
For accounts with multiple sites or projects, two endorsements multiply the General Aggregate so one large loss does not exhaust coverage for the whole account:
- Designated Locations (Per Location) Aggregate, CG 25 04 - a full General Aggregate applies to each described location.
- Designated Construction Project (Per Project) Aggregate, CG 25 03 - a full General Aggregate applies to each project.
Damage to Premises Rented to You and Medical Payments are sublimits that erode inside the Each Occurrence limit, not on top of it.
A contractor's CGL has a $1M Each Occurrence limit and a $2M General Aggregate. By November the insured has already paid $2M in premises-and-operations claims. A new $400,000 covered premises claim then occurs. How much does the CGL pay on the new claim?