11.1 CGL Limits of Insurance and Aggregates
Key Takeaways
- The CGL (CG 00 01) has six interacting limits; standard ISO defaults are $2M/$2M aggregates, $1M each occurrence, $1M personal/advertising, $300,000 rented premises, $5,000 medical.
- The Each Occurrence Limit is the most paid for one occurrence; the Damage to Premises and Medical Expense sublimits are carved out of it, not added to it.
- Products-completed operations claims erode only the separate Products-Completed Operations Aggregate; all other Coverage A/B/C claims erode the General Aggregate.
- Aggregates reset only at the start of a new annual policy period - never when an individual claim is paid.
- CG 25 03 (per construction project) and CG 25 04 (per location) provide separate General Aggregates so one site's loss does not exhaust coverage for others.
How the CGL Limits Section Works
The Commercial General Liability policy (ISO form CG 00 01, occurrence form) does not have a single limit. Instead, Section III - Limits of Insurance establishes a tiered structure of six interacting limits that cap what the insurer will pay regardless of the number of insureds, claims, or suits.
On the exam you must know each limit by name, what it caps, and how the two aggregates restore - or fail to restore - at policy renewal. The six limits, from broadest to narrowest, are the General Aggregate, the Products-Completed Operations Aggregate, the Personal and Advertising Injury Limit, the Each Occurrence Limit, the Damage to Premises Rented to You Limit, and the Medical Expense Limit.
The Six Limits of Insurance
| Limit | Caps | Typical Amount | Resets |
|---|---|---|---|
| General Aggregate | Total Coverage A + B + C except products-completed ops | $2,000,000 | Each policy year |
| Products-Completed Operations Aggregate | All products/completed-ops claims | $2,000,000 | Each policy year |
| Personal & Advertising Injury | All injury to any one person/org (Coverage B) | $1,000,000 | Per person/org, subject to Gen. Agg. |
| Each Occurrence | Total of Cov A BI/PD + Cov C med pay for one occurrence | $1,000,000 | Per occurrence |
| Damage to Premises Rented to You | Fire/specified-peril damage to one premises | $300,000 | Per premises |
| Medical Expense | Med pay for any one person | $5,000 | Per person |
Memorize the standard ISO defaults: $2M/$2M aggregates, $1M each occurrence, $1M personal/advertising, $300,000 rented premises, $5,000 medical. Exam questions frequently test whether a single number is the per-occurrence or the aggregate.
How the Limits Stack and Drain
The Each Occurrence Limit is the most you will pay for the combined total of all bodily injury, property damage, and Coverage C medical payments arising from any one occurrence. The Damage to Premises Rented to You sublimit and the Medical Expense sublimit are carved out of the Each Occurrence Limit - they are not additional money on top of it.
The General Aggregate is the master ceiling for Coverages A, B, and C combined during the policy period, with one critical exception: claims falling under products-completed operations erode only the separate Products-Completed Operations Aggregate, not the General Aggregate. This two-bucket design protects general-premises claims from being exhausted by a defective-product mass tort, and vice versa.
Worked Numeric: Tracking Aggregate Erosion
Assume defaults of $1M each occurrence, $2M General Aggregate, $2M Products-Completed Operations Aggregate.
- A customer slips in the store: $600,000 BI. Paid from Each Occurrence ($1M cap) and drains General Aggregate to $1.4M remaining.
- Defective product injures a buyer: $900,000. This is products-completed ops, so it drains the Products Aggregate to $1.1M; the General Aggregate stays at $1.4M.
- A second premises occurrence costs $1.6M. The Each Occurrence Limit caps the insurer's payment at $1,000,000 (the insured eats $600,000); General Aggregate falls to $400,000.
- A third premises claim of $700,000 is now capped at the remaining $400,000 General Aggregate.
This illustrates the two traps: (1) the per-occurrence cap limits any single loss, and (2) the relevant aggregate, once exhausted, ends coverage for that bucket for the rest of the policy year - it does not refill mid-term.
A CGL policy carries the standard ISO limits. A defective product the insured manufactured injures a consumer, resulting in a $1.3M judgment. How much does the insurer pay, and which limit erodes?
The Aggregate Reset Trap
A frequent exam trap: aggregates reset at the start of each annual policy period, not when a single claim is paid. If a policy is written for less than 12 months or for a multi-year term, ISO endorsement provisions can prorate or extend the aggregate. Candidates often wrongly assume each new claim gets a fresh full aggregate - it does not. Once the General Aggregate is paid out, the policy is effectively exhausted for non-products claims until renewal.
Per-Location and Per-Project Aggregates
Because one blanket aggregate can be drained by an unrelated site, ISO offers two endorsements that multiply protection. The Designated Location(s) General Aggregate Limit (CG 25 04) gives each scheduled location its own separate General Aggregate. The Designated Construction Project(s) General Aggregate Limit (CG 25 03) does the same per construction project. Contractors and multi-site retailers buy these so one catastrophic site does not strip coverage from every other operation.
The Six Limits Listed and What Each Caps
The CGL Limits of Insurance section names six interacting limits the exam expects you to rank:
- General Aggregate — the most paid in the policy year for all Coverage A (except products-completed ops), all Coverage B, and all Coverage C combined.
- Products-Completed Operations Aggregate — a separate annual cap for BI/PD arising after the insured's work/product leaves their control.
- Personal and Advertising Injury Limit — most paid for any one person or organization under Coverage B; it erodes the general aggregate.
- Each Occurrence Limit — most for any single occurrence's BI/PD plus Coverage C combined.
- Damage to Premises Rented to You (Fire Legal) — sub-limit (often $100,000) for fire/explosion/etc. damage to premises rented to the insured.
- Medical Expense (Coverage C) Limit — per-person cap.
How the Limits Drain — Worked Aggregate Erosion
General aggregate $2,000,000, each-occurrence $1,000,000, products-completed-ops aggregate $2,000,000 (separate).
- A premises slip-and-fall pays $800,000 → drains general aggregate to $1,200,000.
- A defamation (Coverage B) pays $500,000 → general aggregate now $700,000.
- A defective-product injury after delivery pays $900,000 → this hits the products-completed-ops aggregate ($2M → $1.1M), not the general aggregate, which remains $700,000.
The lesson: products-completed-operations losses draw on their own separate aggregate, preserving the general aggregate — the single most tested limits nuance.
Per-Location and Per-Project Aggregate Endorsements
A contractor or multi-site business can buy a Per-Location or Per-Project General Aggregate endorsement so that each location or project gets its own full general aggregate rather than sharing one. This prevents one bad site from exhausting the limits available to every other site. A stem describing a contractor wanting separate aggregates for ten job sites is pointing to the per-project aggregate endorsement.
The Aggregate Reset
Aggregates reset only at renewal for a new policy period; they do not refill mid-term after a claim. An insured who exhausts the general aggregate in month three has no Coverage A/B left (except products-ops on its own aggregate) until renewal unless limits are reinstated by endorsement — a reason mid-term limit reviews matter.
A general contractor working five simultaneous construction projects wants assurance that a large loss on Project A will not exhaust the General Aggregate available to Projects B-E. Which endorsement addresses this?