10.1 CGL Coverage A: Bodily Injury and Property Damage Liability

The CGL Form and Coverage A

The Commercial General Liability (CGL) policy is built on standardized ISO forms. The base coverage form most often tested is CG 00 01 (occurrence form), with the CG 00 02 as the claims-made counterpart. The current widely-used edition is CG 00 01 04 13 (April 2013), though newer editions exist. The Declarations, the Common Policy Conditions (IL 00 17), and one or more coverage parts combine to make a complete policy.

The CGL provides three insuring agreements: Coverage A (Bodily Injury and Property Damage Liability), Coverage B (Personal and Advertising Injury Liability), and Coverage C (Medical Payments). Coverage A is the heart of the policy.

What Coverage A Promises

Under Coverage A, the insurer agrees to pay sums the insured becomes legally obligated to pay as damages because of bodily injury (BI) or property damage (PD) to which the insurance applies. The insurer also has the right and duty to defend the insured against any suit seeking those damages — even if the allegations are groundless, false, or fraudulent.

Key trap: the duty to defend is broader than the duty to indemnify. The insurer must defend if any allegation could fall within coverage. Defense costs are paid in addition to the limits of insurance — they do not erode the limits. However, the duty to defend ends once the applicable limit is exhausted by payment of judgments or settlements.

The Coverage Trigger: Occurrence

The occurrence form (CG 00 01) covers BI or PD only if:

• The injury or damage is caused by an occurrence (an accident, including continuous or repeated exposure to substantially the same harmful conditions);
• The occurrence takes place in the coverage territory;
• The BI or PD occurs during the policy period.

The occurrence trigger means the loss event date controls coverage, regardless of when the claim is reported. By contrast, the claims-made form (CG 00 02) triggers on the date the claim is first made, subject to a retroactive date — injury before the retro date is excluded. Claims-made policies often add Extended Reporting Periods (ERP): a basic 'tail' (usually 60 days run-off plus 5-year midnight) and an optional supplemental tail purchased by endorsement.

Key Definitions and Exclusions

Property damage means physical injury to tangible property (including loss of use) or loss of use of tangible property that is not physically injured. Bodily injury means bodily injury, sickness, or disease, including death resulting at any time.

Major Coverage A exclusions tested on the national exam:

Limits of Insurance and Worked Example

The CGL uses a stacked limit structure. Each Occurrence Limit caps payment for a single occurrence; the General Aggregate caps total Coverage A + B + C payments in a policy year; the Products-Completed Operations Aggregate is a separate annual cap.

Worked example: A contractor carries limits of $1,000,000 Each Occurrence / $2,000,000 General Aggregate / $2,000,000 Products-Completed Aggregate. Three separate BI claims arrive: $700,000, $900,000, and $800,000. Each is within the $1M per-occurrence limit, so all three are payable. But the total ($2,400,000) exceeds the $2M General Aggregate, so the insurer pays only $2,000,000 and the insured absorbs the remaining $400,000 once the aggregate is exhausted.

The Occurrence Trigger and the Coverage Territory

CGL Coverage A pays for bodily injury and property damage caused by an occurrence — defined as an accident, including continuous or repeated exposure to substantially the same harmful conditions. The injury or damage must take place in the coverage territory during the policy period.

The coverage territory is broader than many candidates expect: the U.S. (including territories and possessions), Puerto Rico, and Canada; international waters/airspace during transit between those places; and—for the products-completed operations hazard and certain internet/short-trip activities—anywhere in the world if the suit is brought in the coverage territory. Trap: a product made in the U.S. that injures someone abroad can still trigger Coverage A if suit is brought in the U.S.

Key Coverage A Exclusions

Coverage A is broad but carries critical exclusions the exam tests repeatedly:

• Expected or intended injury (except reasonable force to protect persons/property).
• Contractual liability — except liability the insured would have without the contract, plus insured contracts.
• Workers compensation and employers liability (those belong on the WC policy).
• Pollution — the broad absolute pollution exclusion.
• Auto, aircraft, watercraft liability (covered by auto/marine policies).
• Damage to your product / your work (the business-risk exclusions — faulty workmanship is the contractor's risk, not the insurer's).
• Damage to property in your care, custody, or control.

Quick Answer: Coverage A is third-party liability — it never pays to repair the insured's own defective product or work.