The ISO commercial general liability (CGL) coverage form, CG 00 01, has three insuring agreements: Coverage A for bodily injury and property damage, Coverage B for personal and advertising injury, and Coverage C for medical payments. The insurer pays covered damages up to each coverage's limit, and all payments are capped by one of two annual aggregate limits. Defense costs are paid on top of the limits, not out of them.
If you are deciding whether general liability fits your business, start with our buyer's guide to what general liability insurance covers. This article explains how the standard CG 00 01 form is built. Each coverage makes a broad promise in its first paragraph, but most coverage disputes are decided later in the form, 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?
CG 00 01 follows the declarations and has five sections, and a claim must work under all of them. Section I sets out the coverages and their exclusions. Section II says who is an insured. Section III sets the limits. Section IV lists the conditions. Section V defines every word that appears in quotation marks in the policy.
The sections depend on each other. A claim can meet the Coverage A insuring agreement and still fail because the person sued is not an "insured" under Section II, or because a Section V definition leaves out the harm involved. A word in quotation marks has a defined meaning, and the everyday meaning does not control.
How do Coverage A and its occurrence trigger work?
Coverage A makes two promises: the insurer pays the sums the insured becomes legally obligated to pay for bodily injury or property damage, and it defends the insured against suits seeking those damages. "Legally obligated" means a judgment, verdict or settlement, not just an allegation.
The duty to defend is broader than the duty to pay. In most states, an insurer must defend the whole suit if even one allegation could be covered. Courts decide this with the "four corners" rule, called the "eight corners" rule in some states: they compare the plaintiff's complaint with the policy and look at nothing else. In Monroe Guaranty Ins. Co. v. BITCO Gen. Ins. Corp. (2022), the Texas Supreme Court allowed limited outside evidence for the first time, but only evidence that goes solely to coverage.[1] When some counts look covered and others do not, the insurer usually defends under a reservation of rights letter.
The promise to pay applies when the injury is caused by an "occurrence", defined as an accident, including continuous or repeated exposure to substantially the same harmful conditions, and the injury happens during the policy period. When the claim is made does not matter. That is why an occurrence policy from years ago can still respond to a claim filed today.
What do Coverage B and Coverage C add?
Coverage B covers seven named offenses committed during the policy period, so it is triggered by the offense, not by when an injury happens. The seven offenses are: (1) false arrest, detention or imprisonment; (2) malicious prosecution; (3) wrongful eviction or invasion of the right of private occupancy; (4) libel or slander; (5) publication that violates a person's right of privacy; (6) use of another's advertising idea in your advertisement; and (7) infringing another's copyright, trade dress or slogan in your advertisement. Harm outside this list is not covered under Coverage B. A store manager who detains an innocent shopper as a suspected shoplifter has committed false arrest, the first offense on the list.
Coverage C works differently. It pays medical expenses for people injured in an accident on or next to the named insured's premises, or caused by its operations, regardless of fault. The limit is typically $5,000 per person, and the expenses must be incurred and reported within one year of the accident. Coverage C never covers the named insured's own employees. It is goodwill coverage rather than true liability coverage, so there is no duty to defend under it.
Why do defense costs sit outside the limits?
Defense costs sit outside the limits because the form pays them as Supplementary Payments, which apply to Coverages A and B. When the insurer investigates, settles or defends a claim, its costs for lawyers, expert witnesses and court fees are paid in addition to the limits. A defense can go on for years without reducing the money available to pay a judgment. The same section also pays smaller items, such as up to $250 for bail bonds after a covered vehicle accident, up to $250 a day for the insured's lost earnings while helping with the defense, and interest before and after judgment.
There is one hard stop. The duty to defend ends once the applicable limit has been used up paying judgments, settlements or medical expenses. When an aggregate is exhausted, the insurer stops defending the pending suit and every later suit under that aggregate. A business can end up paying its own lawyers mid-lawsuit because earlier settlements used up the aggregate. Every settlement also shows up on the loss runs underwriters review at renewal.
What is an aggregate limit and how does the CG 00 01 limits structure work?
An aggregate limit is the most the insurer will pay in total during the policy period, no matter how many claims are made. CG 00 01 has two: the General Aggregate and the Products-Completed Operations Aggregate. Both sit above the per-occurrence and per-person limits. The limits are not a menu to choose from; each payment counts against several of them at once. A typical declarations page looks like this:
| 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 counts against the each-occurrence limit and, at the same time, against the General Aggregate. Products-completed operations losses are the exception: they count against their own aggregate instead. The two aggregates never share dollars, so when one is used up the other stays whole. Sublimits do not add capacity; they only divide it.
Endorsements tailor this base form to each policyholder and decide how far the coverage really goes. Section II names only the people who are insureds automatically. A landlord, project owner or general contractor becomes an insured only through an additional insured endorsement, usually required by contract. CG 20 10 covers an additional insured for ongoing operations. The CG 25 endorsements (CG 25 03 for designated construction projects, CG 25 04 for designated locations) give each project or location its own aggregate, so a large loss at one job site does not shrink the limits at every other site. CG 21 35 removes Coverage C. CG 21 44 limits coverage to scheduled premises, projects or operations. Two policies on the same base form can cover very different things.
Frequently asked questions
What is the difference between the each-occurrence limit and the general aggregate?
The each-occurrence limit is the most the insurer pays for any one occurrence. The general aggregate is the most it pays in total for all claims during the policy period, except products and completed operations losses. Once the aggregate has been paid out, the insurer pays nothing more, no matter how many incidents occur. Every payment reduces both at once, so coverage can run out even if no single claim reached the per-occurrence limit.
Do defense costs reduce my CGL limits?
No. Under the standard form, defense costs are Supplementary Payments paid outside the policy limits. Investigation costs, attorneys' fees and court costs do not reduce the money available for judgments and settlements. The insurer's duty to defend ends when the limit has been used up paying judgments, settlements or medical expenses.
Why does the CGL have two separate aggregate limits?
Products and completed operations claims often surface long after the work is done, so they have their own aggregate. A bad year of premises and operations claims cannot drain the limit set aside for products and completed work, and the reverse is also true. The two aggregates cannot be combined or moved from one to the other.
Is Coverage C really no-fault coverage?
Yes. Coverage C pays medical expenses for people hurt on or next to your premises, or by your operations, without any finding that you were legally responsible. It exists to settle small injuries quickly and keep goodwill, with a modest per-person limit, a one-year window to incur and report the expenses, and no coverage for your own employees.
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.
Reading your own CG 00 01 policy
CG 00 01 sets what a general liability claim is worth through three insuring agreements, two aggregates and the definitions that decide most disputes. Defense costs are paid outside the limits, but the duty to defend ends once an aggregate is used up. Before you assume you are covered at every location, project or contract, pull the endorsement schedule from your declarations and check it against those contracts.
References
- 1.Supreme Court of Texas. “Monroe Guaranty Insurance Company v. BITCO General Insurance Corporation, No. 21-0232.” https://search.txcourts.gov/Case.aspx?cn=21-0232&coa=cossup ↩