11.1 CGL Limits of Insurance and Aggregates

The Six Limits in the CGL Declarations

The ISO Commercial General Liability Coverage Form (CG 00 01 04 13) is the most heavily tested commercial liability form on the national exam. Its Section III - Limits of Insurance lists six separate dollar limits that work together. Misreading how they interact is the single biggest source of wrong answers in this part of the test.

The declarations page shows these limits:

How the Aggregates Cap Everything

The General Aggregate is the most you'll collect for Coverage A (bodily injury and property damage), Coverage B (personal and advertising injury), and Coverage C (medical payments) combined during the policy period — except for products-completed operations, which has its own separate bucket.

Think of the aggregate as the ceiling and the Each Occurrence limit as the most paid for any single loss event. You cannot collect more than the Each Occurrence limit per occurrence, and you cannot collect more than the aggregate across the whole year, regardless of how many occurrences happen.

Worked example: A policy carries a $1,000,000 Each Occurrence limit and a $2,000,000 General Aggregate. Three unrelated slip-and-fall occurrences produce judgments of $800,000, $1,200,000, and $700,000. Occurrence one pays $800,000. Occurrence two is capped at the $1,000,000 Each Occurrence limit (the insured eats $200,000). Occurrence three would be $700,000, but only $200,000 of aggregate remains ($2,000,000 - $800,000 - $1,000,000), so the insurer pays $200,000 and the insured absorbs $500,000.

The Products-Completed Operations Aggregate (PCOA)

The Products-Completed Operations Aggregate is a wholly separate annual limit that responds only to bodily injury and property damage arising out of the insured's products (goods after they leave the insured's possession) or completed operations (work finished and abandoned away from the premises).

Why this matters: a contractor whose General Aggregate is exhausted by premises and operations claims still has the full PCOA available for a defective-work claim that surfaces later. The exam loves questions that drain one aggregate and ask whether a second category of loss is still covered. The answer turns on which bucket the loss falls into.

Note that Coverage B (Personal & Advertising Injury) and the Damage to Premises Rented to You sublimit erode the General Aggregate, not the PCOA. Medical payments under Coverage C are also subject to the General Aggregate.

Sublimits That Trap Test-Takers

Two sublimits sit inside the Each Occurrence limit and are commonly tested:

• Damage to Premises Rented to You (default $300,000) is the most the insurer pays for damage to premises the insured rents, or temporarily occupies with the owner's permission, when the damage is caused by fire or — under the 04 13 edition — by additional perils for which the insured is liable. It is part of, not in addition to, the Each Occurrence limit.
• Medical Expense (default $5,000 per person) pays reasonable medical costs without regard to fault under Coverage C, for injury on the premises or arising from operations, if expenses are incurred and reported within one year of the accident.

Trap: Med Pay is no-fault — the claimant does not have to prove the insured was negligent. This distinguishes it from Coverage A, which is fault-based liability coverage.

Supplementary Payments Sit Outside the Limits

A frequently missed point: Supplementary Payments are paid in addition to the applicable Limit of Insurance and do not erode it. Under CG 00 01 these include all defense costs and attorney fees, the cost of bonds to release attachments (up to the applicable limit), the cost of bail bonds up to $250, reasonable expenses the insured incurs at the insurer's request including up to $250 per day for lost earnings, court costs, and post-judgment interest.

Because defense is provided in addition to the limits, a $1,000,000 Each Occurrence policy that spends $300,000 defending a suit still has the full $1,000,000 available to pay the judgment. Contrast this with a defense-within-limits (DWL) or "burning limits" policy — common in professional liability — where defense costs erode the limit. The standard CGL is not DWL, and the exam tests that distinction directly.

Splitting and Stacking the Aggregate by Project

A single shared General Aggregate is dangerous for a contractor running many simultaneous jobs: one catastrophic site can exhaust the aggregate and leave every other project uninsured. Two endorsements solve this:

• CG 25 03 — Designated Construction Project(s) General Aggregate Limit gives each scheduled project its own separate General Aggregate.
• CG 25 04 — Designated Location(s) General Aggregate Limit does the same per scheduled location.

Worked example: A roofer with three active projects buys CG 25 03 with a $2,000,000 aggregate per project. A $2,000,000 loss on Project A exhausts only Project A's aggregate; Projects B and C each retain a full $2,000,000. Without the endorsement, the single $2,000,000 General Aggregate would be gone after Project A, capping all later claims at zero. Owners often require a per-project aggregate in the contract for exactly this reason.