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 the ISO CG 00 01 Commercial General Liability Coverage Form (occurrence) and the ISO CG 00 02 form (claims-made). The current widely used edition is CG 00 01 04 13 (the 04 13 edition is the most-tested baseline; exam writers may also reference 12 07). The CGL is the cornerstone casualty policy for businesses, covering liability the insured assumes for harm to third parties arising out of the insured's premises, products, completed work, and operations.

The CGL contains three insuring agreements, each lettered:

• Coverage A - Bodily Injury and Property Damage Liability
• Coverage B - Personal and Advertising Injury Liability
• Coverage C - Medical Payments

Coverage A is the heart of the policy. It pays sums the insured becomes legally obligated to pay as damages because of bodily injury (BI) or property damage (PD) caused by an occurrence that takes place in the coverage territory during the policy period.

Key Coverage A definitions

Occurrence means an accident, including continuous or repeated exposure to substantially the same general harmful conditions. The accident need not be a single sudden event - ongoing exposure (e.g., slow leakage) can qualify. This is the trigger distinction from the claims-made form.

Bodily injury means bodily injury, sickness, or disease sustained by a person, including death resulting from any of these at any time. Pure emotional distress without physical manifestation is generally NOT BI under the standard form.

Property damage means (1) physical injury to tangible property, including resulting loss of use; or (2) loss of use of tangible property that is not physically injured. Electronic data is expressly NOT tangible property under CG 00 01 04 13 - a frequent exam trap.

Insured contract is a defined term that restores coverage for certain assumed liability (leases, easements, sidetrack agreements, and the tort liability of another assumed in a business contract). Liability assumed outside an insured contract is excluded.

Occurrence vs. claims-made trigger

The occurrence form (CG 00 01) responds when the BI or PD occurs during the policy period, regardless of when the claim is reported - even years later. The claims-made form (CG 00 02) responds only when the claim is first made during the policy period (or an extended reporting period), and the injury must occur on or after the retroactive date.

Claims-made policies offer a Basic Extended Reporting Period (ERP) automatically (mini-tail, generally 60 days to report, 5 years for occurrences in last 60 days) and a Supplemental ERP (full tail) that must be purchased.

Limits of insurance - the six CGL limits

The CGL Declarations show six limits. Memorize how the aggregates restore and which payments erode which limit:

• General Aggregate Limit - most paid for all Coverage A (except products-completed operations), all Coverage B, and all Coverage C combined during the policy period.
• Products-Completed Operations Aggregate Limit - a separate aggregate for products/completed-operations BI and PD.
• Personal and Advertising Injury Limit - per person/organization (Coverage B).
• Each Occurrence Limit - most for the sum of A BI/PD plus C medical payments from one occurrence; capped by the applicable aggregate.
• Damage to Premises Rented to You Limit - default $100,000 any one premises (fire and, in the 04 13 edition, certain other perils for premises rented or temporarily occupied).
• Medical Expense Limit (Coverage C) - default $5,000 any one person.

The aggregates reset only at renewal, not when partially exhausted.

Worked example - aggregate erosion

A contractor has a CGL with a $1,000,000 each occurrence limit and a $2,000,000 general aggregate. During the year three covered premises/operations occurrences are paid: $700,000, $600,000, and $900,000.

• Each loss is within the $1,000,000 each-occurrence limit, so the occurrence limit never caps a single loss.
• Running total of paid claims: 700,000 + 600,000 = 1,300,000; then the third loss of $900,000 would bring the total to $2,200,000.
• The general aggregate caps total Coverage A (premises/ops) payments at $2,000,000. So the third loss is paid only up to the remaining aggregate: $2,000,000 - $1,300,000 = $300,000.

The insured absorbs the uninsured $600,000 on that third loss. Note products-completed operations losses would draw on the separate products-completed ops aggregate, not the general aggregate - they would not be capped by this $2,000,000.

Coverage A exclusions to memorize

Coverage A contains a long list of exclusions (lettered a through q in CG 00 01). The most heavily tested:

• Expected or intended injury - BI/PD the insured expected or intended (self-defense carve-back for protecting persons/property).
• Contractual liability - liability assumed in a contract, except an 'insured contract' or liability the insured would have without the contract.
• Liquor liability - applies only if the insured is in the business of manufacturing, selling, serving, or furnishing alcohol (host liquor is not excluded).
• Workers compensation and Employers liability - obligations under WC laws and BI to employees in the course of employment.
• Pollution - the broad absolute pollution exclusion.
• Auto, aircraft, watercraft - liability arising from ownership or use of these (with limited carve-backs for parking and small watercraft).
• Damage to your product, your work, and impaired property - the 'business risk' exclusions (j, k, l, m) that push faulty-workmanship cost back onto the contractor rather than the CGL.

These business-risk exclusions reflect the core principle that the CGL covers liability for damage caused by the work, not the cost of redoing defective work itself.