The ISO Commercial General Liability (CGL) policy form, CG 00 01, provides coverage under three different types of insuring agreements: Coverage A which is responsible for Bodily Injury and Property Damage, Coverage B for Personal and Advertising Injury, and Coverage C for Medical Payments. These coverages have their own triggers and exclusions, as well as their own place in the limits structure. The insurer pays covered damages up to the limits of each coverage's applicable per occurrence limit, with the total amount being capped at either of two possible annual aggregate amounts. Defense costs are paid over and above the stated limits of the policy rather than from those limits.
To find out if General Liability will fit your business, begin by reading our what general liability insurance covers Buyers Guide. The article explains how the standard CG 00 01 Coverage Form was designed. The form makes its broad promises in the first paragraph of each coverage, but most coverage fights are settled three sections later, in the definitions.
CG 00 01 (Commercial General Liability Coverage Form)
CG 00 01 is the standardized ISO coverage form at the core of a commercial general liability policy. It contains three insuring agreements, the rules for who qualifies as an insured, the limits of insurance, the policy conditions, and the definitions that give quoted terms their precise meaning.
How is the CG 00 01 coverage form organized?
The coverage provisions are placed at the back of the declarations and are arranged into five categories of sections. Section I describes what coverages are being provided and identifies what types of claims are excluded from coverage. Section II defines who is considered to be an Insured. Section III explains what limits apply to each type of coverage. Section IV outlines the conditions for coverage. Section V contains definitions for all of the terms used in quotations throughout the policy. Each Section of the Policy is connected to another Section. For example, if a claim meets the requirements of the insuring agreement contained within Coverage A, it may also fail because the Defendant does not meet the definition of "Insured" which is contained in Section II, or because a Section V definition excludes the harm involved. If a word is placed in quotes, then this indicates that the word has been specifically defined and that the plain-English meaning does not control.
How do Coverage A and its occurrence trigger work?
Coverage A has two obligations from the insurance company: the insurance company will pay for sums the insured person is legally responsible to pay for bodily injury or property damage. And the insurance company has an obligation to defend the insured person against suits claiming those same types of damages.
Legal responsibility refers to when there is a court judgment, settlement, or verdict. It does NOT refer to simply allegations. The duty to defend is broader than the duty to pay. In most jurisdictions an insurer owes a full defense if just one allegation could potentially be covered.
Courts use the "four corners" rule to make this decision. Some call it the "eight corners" rule depending on which state they are in. This involves reviewing both the complaint filed by the plaintiff against the defendant, and the actual terms of the policy issued by the insurer. There is no other information considered at all. In Monroe Guaranty Ins. Co. v. BITCO Gen. Ins. Corp. (2022) [1], the Texas Supreme Court allowed limited outside evidence for the first time, however only where it goes solely to coverage. When some counts look covered and others do not, the insurer defends under a reservation of rights letter.
The promise to pay will be effective if the injury was caused by an event (occurrence) which is defined as an accident, including continuous or repeated exposure to substantially the same harmful conditions, happening during the policy period. Whether or not the time the claim is made does not matter. This is why we care about the occurrence trigger now when it happened years ago.
What do Coverage B and Coverage C add?
Coverage B switches the focus of coverage to an act (offense) that takes place during the term of the policy as opposed to the time the injury occurs. There are 7 specific acts that can cause liability. They include: (1) False arrest/Imprisonment, (2) Malicious Prosecution, (3) Wrongful Eviction/Private Occupancy Invasion, (4) Libel/Slander, (5) Violation of Privacy through Publication, (6) Use of Another's Advertising Idea, and (7) Infringement of another's Copyright, Trade Dress, Slogan in an Advertisement. Any other type of harm will result in Coverage B being inactive. A store manager who detains an innocent shoplifter has committed false arrest, the first offense on the list.
Coverage C has a completely different structure. Coverage C pays medical costs for third parties injured in an accident occurring at or adjacent to the named insured's premises, or by its operations, regardless of fault. Typically the maximum amount of Coverage C will be $5,000 per person. Medical expenses must be incurred and reported within 1 year. Coverage C never provides any coverage for the named insured's employees. Coverage C is a "goodwill" type of coverage (i.e., not a true liability coverage) and Coverage C provides no duty to defend.
Why do defense costs sit outside the limits?
The Section on Supplementary Payments relates only to coverages A and B. When the carrier investigates, settles, or defends a claim, the associated expenses, lawyers, expert witnesses, court costs, are paid in addition to coverage limits. Therefore these additional payments will have no effect on the overall coverage limit and can continue for years without touching the amount needed to satisfy the judgment. Additionally, the section covers other small expense items. Such as, up to $250 for bail bonds related to vehicle accident claims covered under this policy, up to $250 per day for lost income, as well as interest, both before judgment and after.
This arrangement has one hard stop. The duty to defend ceases once there are no longer funds available in the aggregate that have been exhausted due to payment of judgments, settlements, or medical expenses. When the aggregate is exhausted, the duty to defend ends for the suit on the table and every future suit subject to that exhausted aggregate. For example, a company can find itself paying their own attorney fees during a lawsuit because they have already used up the available aggregate in settling prior lawsuits. Each settlement made also lands on the loss runs underwriters pull at renewal.
What is an aggregate limit and how does the CG 00 01 limits structure work?
An aggregate limit is the maximum amount that an insurance company will cover in total for all covered damage or loss for a given time period regardless of how many claims are made against the insured. The CG 00 01 has 2 (General Aggregate & Products Completed Operations Aggregate) aggregates. Both aggregates are positioned on top of each individual occurrence and person limits. These limits do NOT act as a menu. They stack. As shown by the declarations of most policies:
| Limit | Typical amount | What it caps |
|---|---|---|
| Each Occurrence | $1,000,000 | The most paid for any one occurrence under Coverage A, including Coverage C payments from the same occurrence |
| General Aggregate | $2,000,000 | The most paid in the policy term for everything except products-completed operations losses |
| Products-Completed Operations Aggregate | $2,000,000 | The most paid in the policy term for products and completed work losses |
| Personal and Advertising Injury | $1,000,000 | The most paid to any one person or organization under Coverage B |
| Damage to Premises Rented to You | $100,000 | A sublimit within the each-occurrence limit for damage to rented premises |
| Medical Expense | $5,000 | The most paid per person under Coverage C |
Every damages payment applies against the each-occurrence limit, and the same dollars simultaneously reduce the general aggregate, with the exception of products completed operations losses, whose dollars reduce that separate aggregate instead. Because these limits never share, once one is exhausted, the other remains whole. Therefore sublimits do not add capacity, they merely carve it up.
The endorsements are used to customize the basic coverage for each of the policyholders and ultimately will determine the extent of the coverage. Section II lists only the automatically included individuals who would be considered as insured under your policy. A landlord, project owner, or general contractor may become an insured only through use of the additional insured endorsements construction contract endorsement. CG 20 10 can be used to provide liability protection during continuing operations. The CG 25 series allows you to multiply the aggregates by project or location so that if there was a claim for loss or damage made due to an accident involving your business at one job site, it will not cause all other job sites' limits to decrease. CG 21 35 removes Coverage C. CG 21 44 restricts coverage to scheduled premises. No two policies on the same base form are necessarily the same policy.
Frequently asked questions
What is the difference between the each-occurrence limit and the general aggregate?
Each Occurrence Limit (Per Incident) is the most an insurance company will pay for one occurrence. Aggregate Limit of Liability (Total or General) is the most an insurance company will pay in total for all claims in a given time period, excluding products and completed operations losses. Once the insurer has paid out the aggregate limit, it makes no further payments regardless of how many incidents occur. Every payment erodes both at once, so coverage can end even if no single claim ever reached the per-occurrence cap.
Do defense costs reduce my CGL limits?
No. Under the standard form, the cost of defending against a claim is a supplementary payment. It falls outside of the policy limits. Therefore, investigation expenses, attorneys' fees, and court costs will not draw down the funds that can be used for judgments and settlements and will not exhaust those funds. The insurer's obligation to defend ends when the limit of liability has been exhausted from paying judgments, settling claims, or paying medical bills.
Why does the CGL have two separate aggregate limits?
Products and completed operations losses are usually noticed long after the work is done, therefore they are grouped together in their own aggregate and cannot be drained by a bad year of premise & operation claim losses nor will a bad year of premise & operation claim loss deplete the limits set aside for products & completed work claim losses. The two aggregates cannot be combined or transferred.
This guide is for educational purposes and summarizes standard ISO policy language. Your policy's specific terms, conditions, and endorsements control. Talk to a licensed broker about your actual exposures.
The Bottom Line
CG 00 01 (the Coverage Form) establishes what a General Liability Claim is worth by defining three Insuring Agreements, two Aggregates, and a multitude of Definitions which ultimately govern most disputes. Defense Costs fall outside of the Limits, however, there is no obligation to continue defending once an Aggregate has been exhausted. Before assuming you have coverage at each Location, Project, or Contract, pull the Endorsement Schedule from your Declarations and compare.
References
- 1.Supreme Court of Texas. “Monroe Guaranty Insurance Company v. BITCO General Insurance Corporation, No. 21-0232.” Accessed July 2026. https://search.txcourts.gov/Case.aspx?cn=21-0232&coa=cossup ↩