11.1 CGL Limits of Insurance and Aggregates

CGL Limits of Insurance and Aggregates

The ISO Commercial General Liability Coverage Form (CG 00 01) does not use a single flat limit. Instead it stacks six separate limits in the Declarations, and you must know how they interact because exam questions routinely test which limit a given loss erodes. The current edition referenced on most state exams is CG 00 01 04 13 (the April 2013 edition remains the form most study materials cite), structured under Section III - Limits of Insurance.

The six limits are: the General Aggregate, the Products-Completed Operations Aggregate, the Each Occurrence Limit, the Personal and Advertising Injury Limit, the Damage to Premises Rented to You limit (fire legal liability), and the Medical Expense limit.

How the limits relate

The Each Occurrence Limit is the most paid for the sum of bodily injury and property damage arising from any one occurrence, plus the medical payments for that same occurrence. The General Aggregate is the most paid for the total of: all Coverage A (BI/PD) other than products-completed operations, all Coverage B (personal and advertising injury), and all Coverage C (medical payments) during the policy period.

A critical exam trap: the Products-Completed Operations Aggregate is a separate bucket. Claims arising out of a finished product or completed work do not erode the General Aggregate - they erode the Products-Completed Ops Aggregate instead. This protects the insured from a single product recall wiping out coverage for ongoing operations.

Default limit values and the two sub-limits

Note two sub-limits sit inside the Each Occurrence limit: Damage to Premises Rented to You (fire legal) and Medical Expense (any one person). They are capped lower and cannot exceed the Each Occurrence amount.

Worked numeric example

A contractor carries CG 00 01 with $1,000,000 Each Occurrence, $2,000,000 General Aggregate, and $2,000,000 Products-Completed Ops Aggregate. During the policy year:

• Occurrence 1 (ongoing operations): a scaffold collapse injures a passerby - settles for $1,400,000.
• Occurrence 2 (ongoing operations): a slip-and-fall - settles for $700,000.
• Occurrence 3 (completed work): a deck the contractor built fails a year after handover - settles for $900,000.

Occurrence 1 is capped at the $1,000,000 Each Occurrence limit, so the insurer pays $1,000,000 and $400,000 is uninsured. Occurrence 2 pays $700,000. Together these erode the General Aggregate: $1,000,000 + $700,000 = $1,700,000, leaving $300,000 of General Aggregate. Occurrence 3 is products-completed operations, so it draws on the separate Products-Completed Ops Aggregate and pays $900,000 in full. Total paid: $2,600,000.

How the Six Limits Stack

The CGL declarations show six limits that interact in a fixed hierarchy: General Aggregate, Products-Completed Operations Aggregate, Personal & Advertising Injury (per person/org), Each Occurrence, Damage to Premises Rented to You (fire legal, commonly $100,000), and Medical Expense (per person, commonly $5,000). The Each-Occurrence limit caps any single occurrence; the aggregates cap the total the policy pays in the policy year.

What Erodes Which Aggregate

Keeping PCOH on its own aggregate means a year of product claims cannot exhaust the limit available for premises accidents, and vice versa.

Worked Aggregate Example

A contractor has a $1,000,000 each-occurrence / $2,000,000 general aggregate / $2,000,000 PCOH aggregate CGL. During the year: a $1,000,000 premises injury, a $700,000 advertising-injury claim, and an $800,000 product-defect claim.

The product claim does not touch the nearly exhausted general aggregate, illustrating why the dual-aggregate structure protects the insured.

Working the Limit Hierarchy

A reliable method for CGL limit questions is to label every claim by type, then route it to the right limit before adding anything up. Premises-and-operations bodily injury and property damage, personal and advertising injury, and medical payments all draw down the general aggregate, while products-completed operations claims draw only on the separate products aggregate. Within a single occurrence the each-occurrence limit caps the payout no matter how many claimants are involved, and the damage-to-premises-rented-to-you and medical-expense sublimits sit inside that structure with their own smaller caps.

The dual-aggregate design is the point the exam most wants you to grasp: by isolating product claims on their own aggregate, the policy guarantees that a bad product year cannot consume the limit a business needs for ordinary slip-and-fall accidents, and vice versa. Practice routing three or four mixed claims through this hierarchy until the destinations are automatic.