10.2 CGL Coverage B: Personal and Advertising Injury, Coverage C: Medical Payments

Coverage B - Personal and Advertising Injury Liability

Coverage B pays sums the insured becomes legally obligated to pay as damages because of personal and advertising injury, and like Coverage A it carries a right and duty to defend. The trigger differs from Coverage A: Coverage B responds to a defined offense committed during the policy period, not to an "occurrence." The offense must arise out of the insured's business and be one of the enumerated wrongful acts in the definition.

The Seven Enumerated Offenses

"Personal and advertising injury" is defined as injury arising out of one or more of these offenses:

1. False arrest, detention, or imprisonment
2. Malicious prosecution
3. Wrongful eviction, wrongful entry, or invasion of the right of private occupancy of a room/dwelling/premises the person occupies
4. Oral or written publication of material that slanders or libels a person or organization or disparages goods/products/services
5. Oral or written publication of material that violates a person's right of privacy
6. The use of another's advertising idea in the insured's advertisement
7. Infringing upon another's copyright, trade dress, or slogan in the insured's advertisement

Coverage B Exclusions Worth Memorizing

Coverage B is narrowed by several exclusions that frequently appear on exams:

• Knowing violation of the rights of another (intentional offense).
• Material published with knowledge of falsity.
• Material published before the policy period began.
• Criminal acts committed by or at the direction of the insured.
• Contractual liability for personal/advertising injury (with exceptions).
• Breach of contract (other than misappropriation of advertising ideas under an implied contract).
• Quality or performance of goods / failure to conform to statements (false advertising about your own product).
• Infringement of patent or trademark - note that copyright, trade dress, and slogan ARE covered, but patent and trademark are excluded.

Coverage C - Medical Payments

Coverage C pays reasonable medical expenses for bodily injury caused by an accident on premises the insured owns/rents, on ways next to those premises, or because of the insured's operations. The defining feature is that Coverage C pays regardless of fault - no legal liability of the insured is required. Because it is a goodwill, no-fault coverage, payments are made promptly to discourage lawsuits that would otherwise fall under Coverage A.

Coverage C Conditions and Time Limits

• The accident must take place in the coverage territory and during the policy period.
• The expenses must be incurred and reported within one year of the date of the accident.
• The injured person must submit to examination by physicians chosen by the insurer.
• Coverage C does not apply to the insured, the insured's employees, tenants, or persons injured while taking part in athletics, among other exclusions.

Limits Structure Across Coverages A, B, and C

Note that the Medical Expense Limit (Coverage C) is a sublimit within the Each Occurrence Limit (Coverage A) - it is not stacked on top. The Personal & Advertising Injury limit is separate but still drops into the General Aggregate.

Trade Dress and Slogan vs. Patent and Trademark

The single most-tested Coverage B distinction is the intellectual-property line. Copyright, trade dress, and slogan infringement committed in the insured's advertisement is covered; patent and trademark infringement is excluded entirely. The reasoning: advertising offenses (copying a competitor's look or tagline) flow naturally from advertising, whereas patent/trademark disputes are specialized business risks better insured under intellectual-property policies. Watch for a question that buries 'trademark' in a list of otherwise covered advertising offenses - it is the trap answer.

Coverage C Practical Notes

Because Coverage C pays without regard to fault, adjusters use it to extend goodwill and head off larger Coverage A suits. Eligible costs include first aid at the time of the accident, necessary medical, surgical, dental, X-ray, ambulance, hospital, professional nursing, and funeral expenses. The injured person need not sue; they simply submit bills. However, the $5,000 per person sublimit is modest, so serious injuries quickly exceed it and proceed under Coverage A, where legal liability must then be established.

Worked Example - Aggregate Erosion

A business has a $1,000,000 Each Occurrence limit and a $2,000,000 General Aggregate. During the year it pays a $600,000 Coverage A claim, a $400,000 Coverage B claim, and a $5,000 Coverage C medical payment. All three drop into the General Aggregate: $600,000 + $400,000 + $5,000 = $1,005,000 consumed, leaving $995,000 of General Aggregate. A subsequent $1,000,000 occurrence would be capped at the $995,000 remaining aggregate, not the full per-occurrence limit - the aggregate is the true ceiling.

Note that products-completed operations losses erode their own separate aggregate, not the General Aggregate.