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

Coverage B: Personal and Advertising Injury Liability

While Coverage A responds to physical harm caused by an occurrence, Coverage B responds to a defined list of offenses that cause non-physical, reputational, or economic harm. There is no "occurrence" or "bodily injury" requirement for Coverage B - coverage attaches when one of the enumerated offenses is committed in the course of the insured's business during the policy period.

Like Coverage A, the insurer has the right and duty to defend, and defense costs are paid in addition to the Personal and Advertising Injury Limit, which is a per-person/per-organization limit subject to the General Aggregate.

The covered offenses

The CG 00 01 defines personal and advertising injury as injury arising out of one or more of these offenses:

• False arrest, detention, or imprisonment;
• Malicious prosecution;
• Wrongful eviction, wrongful entry, or invasion of the right of private occupancy of a room/dwelling/premises the person occupies (committed by or for the landlord/owner/lessor);
• Oral or written publication of material that slanders or libels a person or organization or disparages goods/products/services;
• Oral or written publication that violates a person's right of privacy;
• The use of another's advertising idea in the insured's advertisement;
• Infringing upon another's copyright, trade dress, or slogan in the insured's advertisement.

Trap: patent and trademark infringement are not covered offenses (only copyright, trade dress, and slogan in an advertisement are listed). Note also that the first two offenses (false arrest and malicious prosecution) are sometimes called the "personal injury" group, while the last two (advertising idea and copyright/trade dress/slogan) are the "advertising injury" group - the 1998 ISO revision merged them into one combined offense list with a single shared limit.

Key Coverage B exclusions

Several exclusions narrow Coverage B and are frequently tested:

• Knowing violation of rights of another - the insured knew the act would violate rights and inflict injury.
• Material published with knowledge of falsity - knowingly false statements are excluded.
• Material published before the policy period (first publication before inception).
• Criminal acts committed by or at the direction of the insured.
• Breach of contract (except an implied contract to use another's advertising idea).
• Quality or performance of goods (failure to conform) to advertised statements.
• Infringement of patent, trademark, trade secret - except trade dress/slogan in advertisements.
• Insureds in the business of advertising, broadcasting, publishing, or telecasting (media exposure needs a specialized form).

Coverage C: Medical Payments

Coverage C pays medical expenses for bodily injury caused by an accident on premises the insured owns or rents, on ways next to those premises, or because of the insured's operations. The defining feature of Coverage C is that it is a goodwill / no-fault coverage: it pays regardless of the insured's legal liability. There is no need to prove negligence - it functions to settle minor injuries quickly before they escalate into liability suits.

Medical payments include first aid at the time of an accident, necessary medical, surgical, dental, X-ray, ambulance, hospital, professional nursing, and funeral expenses. Because Coverage C ignores fault, it is one of the few places in the CGL where the insurer pays without any tort liability finding - the rationale is purely loss prevention and customer goodwill.

Coverage C limits and conditions

• The Medical Expense Limit is shown in the declarations, with a common default of $5,000 any one person.
• Expenses must be incurred and reported within one year of the accident date.
• The injured person must submit to examination by the insurer's physicians as often as reasonably required.
• Coverage C payments are part of the Each Occurrence Limit and erode the General Aggregate.

Key exclusions: medical payments are not available to the named insured, tenants, employees (covered by workers comp), persons injured while practicing/instructing/participating in athletics, anyone whose injury is otherwise excluded under Coverage A, or persons taking products.

Worked example: Coverage C vs. Coverage A interaction

A visitor trips on a torn carpet in the insured's store and incurs $4,000 in immediate medical bills. The insured carries Coverage C at $5,000 per person.

• The insurer can pay the $4,000 under Coverage C with no proof of negligence - a fast, goodwill settlement.
• That $4,000 reduces the Each Occurrence Limit and the General Aggregate.
• If the visitor later sues and proves liability for $50,000 in damages, that claim is handled under Coverage A, and the prior medical-payments amount counts toward the each-occurrence cap so the same dollars are not paid twice.

Trap: Coverage C is not a substitute for liability coverage - it has a small limit and is designed to defuse small claims, not to satisfy large judgments.

Comparing the three insuring agreements

Learners should be able to distinguish all three coverages at a glance, because exam questions often test which coverage responds to a given scenario:

Note that Coverage C does not carry a duty to defend - it simply pays defined medical bills. A useful memory aid: A and B require the insured to be legally liable, while C pays regardless of liability to keep small injuries from becoming lawsuits in the first place.