8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury

The Three Liability Coverages of the CGL

The ISO Commercial General Liability Coverage Form (CG 00 01) organizes its insuring agreements into three lettered coverages. Knowing exactly what each covers — and the defined terms behind them — is heavily tested.

• Coverage A — Bodily Injury and Property Damage Liability
• Coverage B — Personal and Advertising Injury Liability
• Coverage C — Medical Payments (no-fault, paid regardless of the insured's liability)

Coverages A and B pay only sums the insured is legally obligated to pay; Coverage C is a goodwill, no-fault coverage that can defuse a small injury before it becomes a lawsuit.

Defined Terms (Memorize These)

Bodily injury (BI) means bodily injury, sickness, or disease sustained by a person, including death that results. Purely emotional distress, without physical injury, often falls outside this definition.

Property damage (PD) 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. The CGL specifies that electronic data is not tangible property — a key exclusion for data corruption claims.

Occurrence in the CGL means an accident, including continuous or repeated exposure to substantially the same general harmful conditions — the bridge between the legal concept of negligence and the policy's trigger.

Coverage B — Personal and Advertising Injury

Unlike Coverage A, Coverage B responds to harm arising from named offenses, not from physical accident. The seven listed offenses are:

1. False arrest, detention, or imprisonment
2. Malicious prosecution
3. Wrongful eviction or invasion of right of private occupancy
4. Slander or libel (oral or written defamation)
5. Violation of a person's right of privacy
6. Use of another's advertising idea in your advertisement
7. Infringement of copyright, trade dress, or slogan in your advertisement

Note that several of these are intentional acts — yet they are covered here because they are specifically enumerated offenses, an exception to the general intentional-injury exclusion in Coverage A.

CGL Limits Structure and a Worked Example

The CGL stacks several limits, and the exam expects you to apply them in order:

Worked example: Limits are $1,000,000 each occurrence / $2,000,000 general aggregate. Three separate Coverage A occurrences in one year cost $700,000, $800,000, and $900,000. Each is within the $1,000,000 per-occurrence cap, but the total ($2,400,000) exceeds the $2,000,000 general aggregate. The insurer pays $700,000 + $800,000 + $500,000 = $2,000,000, leaving $400,000 uninsured on the third claim once the aggregate is exhausted.

Two Separate Aggregates — A Common Trap

The CGL maintains two distinct annual caps: the General Aggregate and the Products-Completed Operations Aggregate. Products/completed-ops claims do not erode the general aggregate, and vice versa.

Suppose limits are $1M occurrence / $2M general aggregate / $2M products-completed ops aggregate. A premises slip-and-fall (Coverage A, ongoing operations) reduces only the general aggregate, while a claim from a defective product sold reduces only the products-completed ops aggregate. An insured can therefore exhaust one aggregate while the other remains fully available — a frequent multiple-choice distractor that asks whether a products claim is barred after general-aggregate exhaustion. It is not.

Defense Costs and the Supplementary Payments

A defining feature of the CGL is that defense is provided in addition to the limit of insurance. The insurer has the duty to defend any suit seeking damages covered by the policy, and these defense costs do not reduce the limit — they are paid under the Supplementary Payments section.

Supplementary Payments also cover: all costs taxed against the insured, up to $250 for bail bonds, the cost of bonds to release attachments, post-judgment interest, and reasonable expenses the insured incurs assisting the defense (up to $250 a day for lost earnings). The duty to defend ends when the applicable limit is exhausted by payment of judgments or settlements — a key timing point on the exam. This outside-the-limit defense is why a liability policy can pay far more in total than its stated face amount.

Who Is an Insured — and the Coverage C Twist

The CGL's Section II — Who Is an Insured automatically extends coverage beyond the named insured: to employees and volunteer workers for acts within the scope of their duties, to executive officers and directors of a corporation, and to newly acquired or formed organizations for a limited window. But employees are not insureds for bodily injury to a fellow employee (that exposure belongs to workers compensation and employers liability).

Coverage C — Medical Payments is the unusual member of the trio: it pays the medical expenses of an injured third party regardless of the insured's fault, up to a modest per-person sub-limit, if the injury happens on the insured's premises or from the insured's operations and is reported within a set time (often one year). It does not apply to the insured, the insured's employees, or tenants. The purpose is goodwill — settling a minor injury quickly before it escalates into a Coverage A liability suit.