11.1 CGL Limits of Insurance and Aggregates

The Six-Limit Structure of the CGL

The Commercial General Liability coverage form (ISO CG 00 01 04 13 for occurrence; CG 00 02 04 13 for claims-made) does not use a single limit. The Limits of Insurance section (Section III) sets up a six-limit ladder, and exam questions almost always test how a single loss erodes more than one limit at the same time. Memorize the ladder top-to-bottom, because the rules of payment apply in that order.

The declarations show these limits:

How the Two Aggregates Interact

The General Aggregate is the most the insurer pays in the policy period for everything except products-completed operations. The Products-Completed Operations Aggregate is a separate bucket — losses charged to it do not erode the General Aggregate, and vice versa. This is a favorite trap: a finished-work liability loss is paid from the products-completed aggregate, leaving the General Aggregate fully intact for premises/operations claims.

A second trap: the Damage to Premises Rented to You limit and the Medical Expense limit are sub-limits of the Each Occurrence Limit — they are carved out of it, not added on top. They are, however, still subject to the General Aggregate.

Defense costs are paid in addition to the limits ("supplementary payments"); they do not reduce the Each Occurrence or aggregate limits, which distinguishes the CGL from many "defense-within-limits" professional liability forms.

Worked Numeric: Erosion of Limits

Declarations: General Aggregate $2,000,000; Products-Completed Ops Aggregate $2,000,000; Each Occurrence $1,000,000; Damage to Premises Rented $300,000; Medical Expense $10,000.

Scenario: A customer slips in the store (premises operations). BI judgment is $700,000 and PD to the customer's property is $120,000 from the same occurrence.

• Total of one occurrence = $700,000 + $120,000 = $820,000, which is under the $1,000,000 Each Occurrence limit, so the full $820,000 is paid.
• That $820,000 is charged to the General Aggregate, reducing it from $2,000,000 to $1,180,000.
• The Products-Completed Ops Aggregate is untouched — still $2,000,000.

Now a later occurrence produces BI of $1,400,000. The Each Occurrence limit caps payment at $1,000,000, and that $1,000,000 is charged against the remaining General Aggregate of $1,180,000, leaving $180,000 for any further premises/operations claims that period. The insured pays the $400,000 excess out of pocket (or from an umbrella).

Damage to Premises Rented to You

The old name was "Fire Legal Liability." Under CG 00 01 04 13, the limit covers PD to premises (and contents) rented to the insured, or temporarily occupied with the owner's permission. For premises rented for 7 or fewer consecutive days, all causes of loss are covered; for longer-term rentals only fire is covered unless an endorsement broadens it.

The default limit shown is commonly $100,000 and applies per premises, but it is still drawn down by the General Aggregate. This is the only place a standard CGL pays for damage to property the insured is occupying — a key distinction from the care, custody, or control exclusion discussed later.

Medical Expense (Coverage C) — No-Fault

Coverage C pays reasonable medical expenses for bodily injury caused by an accident on premises the insured owns/rents or arising from operations, regardless of fault. The Medical Expense limit (often $5,000–$10,000 per person) is a sub-limit of the Each Occurrence limit. Expenses must be incurred and reported within one year of the accident. Coverage C does not apply to the insured, employees, tenants, or anyone injured while taking part in athletics — those route to Coverage A liability or are excluded.

Single Limit vs. Split Limits and Per-Project Aggregates

Unlike the split limits common on auto (e.g., 100/300/50), the CGL uses a single Each Occurrence limit that combines bodily injury and property damage into one number. Candidates who memorized auto's three-number split must reset their thinking here: one occurrence draws from one combined limit, then up against the aggregates above it.

A recurring exam scenario asks how reinstatement works. Standard CGL limits do not reinstate mid-term — once the General Aggregate is exhausted, the policy is "burned out" until renewal, even if there are months left. The fix is a per-project endorsement (covered in 11.3) that gives each job its own aggregate.

Finally, watch the "all of" language: the General Aggregate is the most paid "for the sum of" Coverage A, B, and C payments. So a large Coverage B (advertising injury) settlement erodes the same General Aggregate that pays slip-and-fall claims — the limits are shared, not stacked, across coverages.