Study guide
8.6 CGL Limits and Conditions
Property & Casualty Insurance Exam
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1 Introduction
0.1 About the Property & Casualty Exam 0.2 How to Use This Course
2 Chapter 1: Insurance Fundamentals
1.1 Risk and Risk Management 1.2 Types of Risk 1.3 Principles of Insurance 1.4 The Insurance Contract 1.5 Policy Structure and Components
3 Chapter 2: Property Insurance Concepts
2.1 Property Coverage Basics 2.2 Perils, Hazards, and Exclusions 2.3 Valuation Methods 2.4 Coinsurance and Insurance to Value 2.5 Deductibles and Policy Limits
4 Chapter 3: Dwelling Policies
3.1 Dwelling Policy Overview 3.2 Dwelling Policy Forms (DP-1, DP-2, DP-3) 3.3 Dwelling Property Coverages 3.4 Dwelling Exclusions and Conditions
5 Chapter 4: Homeowners Policies
4.1 Homeowners Policy Overview 4.2 Homeowners Policy Forms (HO-2 through HO-8) 4.3 Section I: Property Coverages 4.4 Section II: Liability Coverages 4.5 Homeowners Exclusions 4.6 Homeowners Conditions 4.7 Common Homeowners Endorsements
6 Chapter 5: Personal Auto Policy
5.1 Personal Auto Policy Overview 5.2 Part A: Liability Coverage 5.3 Part B: Medical Payments Coverage 5.4 Part C: Uninsured/Underinsured Motorists 5.5 Part D: Physical Damage Coverage 5.6 PAP Exclusions 5.7 No-Fault Insurance and PIP
7 Chapter 6: Liability Insurance Concepts
6.1 Liability Insurance Basics 6.2 Negligence and Tort Law 6.3 Types of Legal Liability 6.4 Personal Umbrella Policies
8 Chapter 7: Commercial Property Insurance
7.1 Commercial Package Policy (CPP) 7.2 Building and Personal Property Coverage Form 7.3 Causes of Loss Forms 7.4 Business Income Coverage 7.5 Businessowners Policy (BOP)
9 Chapter 8: Commercial General Liability
8.1 CGL Policy Overview 8.2 Coverage A: Bodily Injury and Property Damage 8.3 Coverage B: Personal and Advertising Injury 8.4 Coverage C: Medical Payments 8.5 CGL Exclusions 8.6 CGL Limits and Conditions
10 Chapter 9: Commercial Auto Insurance
9.1 Business Auto Policy Overview 9.2 Covered Auto Designation Symbols 9.3 BAP Liability Coverage 9.4 BAP Physical Damage Coverage 9.5 Garage and Truckers Coverage Forms
11 Chapter 10: Workers Compensation
10.1 Workers Compensation Overview 10.2 Part One: Workers Compensation Insurance 10.3 Part Two: Employers Liability 10.4 Workers Compensation Exclusions 10.5 Other States and USL&H Coverage
12 Chapter 11: Other Commercial Lines
11.1 Inland Marine Insurance 11.2 Ocean Marine Insurance 11.3 Commercial Crime Insurance 11.4 Surety Bonds 11.5 National Flood Insurance Program 11.6 Professional Liability Insurance 11.7 Commercial Umbrella and Excess Liability 11.8 Boatowners and Personal Watercraft Insurance 11.9 Farm and Ranch Insurance 11.10 Mobile Home and Manufactured Housing Insurance 11.11 Title Insurance
13 Chapter 12: Insurance Regulations and Ethics
12.1 Producer Licensing 12.2 Producer Authority and Responsibilities 12.3 Unfair Trade Practices 12.4 Claims Settlement Practices 12.5 State Insurance Department 12.6 Penalties and Disciplinary Actions
8.6 CGL Limits and Conditions
Key Takeaways Explain This Topic AI
The CGL has six limits: General Aggregate, Products-Completed Operations Aggregate, Personal and Advertising Injury, Each Occurrence, Damage to Premises Rented to You ( $100,000), and Medical Expense ( $5,000 per person).
The General Aggregate caps total payments for premises-operations, Coverage B, and Coverage C, but NOT products-completed operations, which has its own separate aggregate.
The Each Occurrence limit is the most the insurer pays for any single occurrence regardless of the number of claimants, claims, or insureds involved.
Standard limits are $1,000,000 each occurrence and $2,000,000 General and Products-Completed Operations aggregates; other insurance is settled as primary, excess, or contributing (equal shares or by limits).
The separation-of-insureds condition applies coverage separately to each insured, so one insured's excluded conduct does not automatically void coverage for innocent insureds.
Last updated: June 2026
The Six Limits of the CGL
The CGL Declarations list six distinct limits. Knowing how each interacts with the aggregates is one of the most tested points in the chapter.
- Limit Standard amount Applies to
- General Aggregate $2,000,000 Total for premises-ops (Cov A), Cov B, and Cov C
- Products-Completed Operations Aggregate $2,000,000 Total for PCOH claims (separate pool)
- Personal & Advertising Injury $1,000,000 Most per one person/organization (Cov B)
- Each Occurrence $1,000,000 Most for BI + PD from one occurrence (Cov A)
- Damage to Premises Rented to You $100,000 Fire/short-term-rental damage to rented space
- Medical Expense $5,000 Per person (Coverage C)
- How the Each-Occurrence Limit Works
The Each Occurrence limit is the most the insurer pays for all BI and PD arising from a single occurrence , regardless of :
- the number of persons injured,
- the number of claims or suits, or
the number of insureds involved.
Worked example: A single fire causes $500,000 of third-party property damage and $750,000 of bodily injury — $1,250,000 total from one occurrence. With a $1,000,000 Each Occurrence limit, the insurer pays $1,000,000 , and the remaining $250,000 erodes nothing else because the occurrence limit is the cap.
Which Aggregate Does a Claim Erode?
This table is the single most useful exam tool in the section:
Claim type Each Occurrence? General Aggregate? PCOH Aggregate?
- Slip-and-fall (premises) Yes Yes No
- Defective-product injury Yes No Yes
- Completed-operations injury Yes No Yes
- Libel (Coverage B) P&AI limit Yes No
- Medical payments $5,000/person Yes No
- Fire to rented premises Separate $100K No No
Why a separate PCOH aggregate? Product recalls and latent defects can generate catastrophic losses; isolating them protects the premises-operations limits a business relies on for day-to-day claims. Note: defense costs (supplementary payments) do not erode any limit.
- Key Policy Conditions
- Duties in the Event of Occurrence, Claim, or Suit
The insured must:
- give notice as soon as practicable (time, place, nature, witnesses, injured parties);
- forward every demand, notice, summons, or legal paper immediately;
- cooperate in the investigation, settlement, and defense;
not, except at its own cost, voluntarily make a payment or assume an obligation without the insurer's consent (first-aid expenses excepted).
Other Insurance
When other valid coverage exists, the CGL responds as:
- Status How the CGL pays
- Primary Pays first, up to its limit
- Excess Pays only after other primary coverage is exhausted
- Contributing Shares with other primary coverage
Two sharing methods: contribution by equal shares (each policy pays equally until the smaller limit is used up, then the larger continues) and contribution by limits (each pays in proportion to its limit).
Legal Action Against the Insurer
No one may sue the insurer until the insured has complied with all policy terms , and the insured's obligation has been finally determined by judgment after trial or by written agreement among insured, claimant, and insurer.
Separation of Insureds
Except for the limits and certain duties, the insurance applies separately to each insured . One insured's conduct that triggers an exclusion does not automatically void coverage for an innocent insured. Example: if Employee A intentionally injures someone, the employer may still be covered even though A's intentional act is excluded as to A.
Transfer of Rights of Recovery (Subrogation)
If the insured has rights to recover from a third party, those rights transfer to the insurer after payment, and the insured must do nothing to impair them.
Premium Audit
The CGL is auditable : the deposit premium is estimated, and the final premium is computed on actual exposures (payroll, gross sales, square footage, units), reconciled at audit.
Common Limit Packages
- Package Each Occurrence General Aggregate PCOH Aggregate
- Minimum $300,000 $600,000 $600,000
- Standard $1,000,000 $2,000,000 $2,000,000
- Enhanced $2,000,000 $4,000,000 $4,000,000
- High $5,000,000 $10,000,000 $10,000,000
- How the General Aggregate Can Be Exhausted Mid-Term
An often-missed point: the General Aggregate is the total the insurer will pay for all eligible claims during the policy period , and it can be used up before the policy expires . Once exhausted, no further premises-operations, Coverage B, or Coverage C claims are paid until renewal — even though the policy is still technically in force.
Worked example: A business with a $2,000,000 General Aggregate suffers three covered slip-and-fall judgments of $800,000 each in one policy year — $2,400,000 total. The insurer pays only $2,000,000 ; the final $400,000 is uninsured because the aggregate is exhausted. Meanwhile, the Products-Completed Operations Aggregate is untouched , so a separate product claim that same year could still be paid up to its own $2,000,000 — illustrating exactly why the two pools are kept separate.
Per-Project and Per-Location Aggregate Endorsements
Contractors and multi-site businesses often modify the single shared General Aggregate so one bad project or location cannot drain protection for all the others:
- Endorsement Effect
- CG 25 03 — Per Project Aggregate A separate General Aggregate applies to each construction project
- CG 25 04 — Per Location Aggregate A separate General Aggregate applies to each described premises
These endorsements multiply the aggregate protection and are a frequent exam topic for contractor and real-estate scenarios.
Why the Conditions Matter for Claims
The duties-after-loss conditions are not boilerplate — breaching them can forfeit coverage . Late notice that prejudices the insurer's investigation, or a voluntary payment made without consent, can give the insurer grounds to deny or reduce a claim. The exam frequently presents an insured who admits fault at the scene or settles privately; the correct response is that the insured violated the no-voluntary-payment condition (first aid excepted) and may lose coverage for the amount paid.