CGL Limits, Aggregates, and the "Your Work" Exclusion in One Policy Year
Ridgeline Contracting carries an occurrence-form CGL with these limits: each occurrence $1,000,000; general aggregate $2,000,000; products-completed operations aggregate $2,000,000; personal and advertising injury $1,000,000; damage to premises rented to you $100,000; medical expense $5,000. The contractor also owns a pickup and rents box trucks as needed, but carries no commercial auto policy and no umbrella.
During the current policy year, five things happen:
- January - a customer slips on ice in Ridgeline's office lobby; claim settles for $250,000.
- March - the owner of a 2022 roof job reports that water intrusion from Ridgeline's faulty flashing ruined $600,000 of interior finishes and inventory. Re-doing the roof itself costs $80,000.
- May - a rented box truck is rear-ended by Ridgeline's employee while hauling materials; the other driver claims $150,000.
- July - a former employee sues for a back injury suffered on a job site.
- September - a competitor sues over a misleading comparison ad; defense and settlement total $400,000.
1. Allocate items 1, 2, and 5 to the correct limits and state how much of the general aggregate remains after those three claims.
Read the worked answer
Item 1 - office slip-and-fall: $250,000. Premises liability, one occurrence, within the $1M each-occurrence limit. Charges the general aggregate.
Item 2 - 2022 roof job: $600,000 covered / $80,000 excluded.
- The interior finishes and inventory are damage to other property caused by the insured's completed work, so they fall under products-completed operations and hit the $2M PCO aggregate - not the general aggregate.
- The $80,000 to tear out and redo the roof itself is the cost of repairing the insured's own defective work: excluded by the "your work" exclusion. If the flashing had been installed by a subcontractor, the subcontractor exception could restore the $80,000, but on these facts Ridgeline did the work.
Item 5 - misleading ad: $400,000. Personal and advertising injury. On the standard occurrence form this limit is a sublimit within the general aggregate, not a separate aggregate.
Aggregate math (general aggregate only):
- $2,000,000 − $250,000 − $400,000 = $1,350,000 remaining.
- The $600,000 does not reduce it; it reduces the PCO aggregate from $2,000,000 to $1,400,000.
2. Items 3 and 4 - the rented box truck and the injured former employee. Covered under this CGL? Explain the reasoning the adjuster must document.
Read the worked answer
Item 3 - the box truck: no CGL coverage.
- The CGL auto exclusion bars bodily injury or property damage arising out of the ownership, maintenance, use, or entrustment of any auto. It does not matter that the truck was rented for the day; a rented truck used to haul materials is a hired auto, and hired/non-owned auto liability belongs on a commercial auto policy (or a hired-auto endorsement).
- Practical consequence: Ridgeline is defending a $150,000 claim with no liability coverage for it. The fix is a business auto policy or hired/non-owned auto coverage, and the gap should be documented in writing to the insured.
- Exception to check: the loading/unloading of the truck can fall back to the CGL if injury occurs during loading and the auto is not the active instrument of harm. Document who was doing what.
Item 4 - the employee's back injury: no CGL coverage.
- The CGL excludes bodily injury to an employee arising out of and in the course of employment, and the employer's liability exposure belongs on the workers compensation policy (Part Two).
- If the worker was a leased employee or a subcontracted laborer, the analysis changes - a subcontracted independent contractor's injured employee is generally not the insured's employee for the exclusion, but the insured's liability to that person may still be shaped by the contract and by the "your work" analysis.
Both denials should cite the specific exclusion and identify the policy that should respond, not just deny.
3. The insured's broker argues the September ad claim should be paid from a "separate" $1M limit on top of the $2M aggregate. Is that right, and what should the reservation-of-rights letter say?
Read the worked answer
No. The personal and advertising injury limit is an each-occurrence-style cap, not a separate aggregate.
- Standard occurrence-form structure: General Aggregate $2M sits over all covered injury other than products-completed operations; Personal & Advertising Injury $1M caps any one offense; Each Occurrence $1M caps any one occurrence of bodily injury/property damage.
- Advertising injury payments therefore erode the $2M general aggregate. The broker's theory would give $3M+ of aggregate for a $2M form.
- The only truly separate aggregate on this policy is the products-completed operations aggregate.
Reservation-of-rights content:
- Acknowledge the ad claim falls within Coverage B (personal and advertising injury) - misleading comparative advertising can constitute an offense, subject to the knowledge-of-falsity and prior-publication exclusions. If the insured knew the comparison was false, the knowledge exclusion may defeat coverage entirely.
- Confirm defense is being provided under a reservation, that defense costs erode the limit (this form is not defense-outside-limits unless endorsed), and state the current aggregate position ($1,350,000 before the ad claim, reduced further by defense and indemnity).
- Flag the coverage gap items (hired auto, employee injury) separately and recommend the insured correct them at renewal.