10.1 CGL Coverage A: Bodily Injury and Property Damage Liability

What Coverage A Provides

The heart of the Commercial General Liability (CGL) policy is Coverage A: Bodily Injury and Property Damage Liability. The standard contract is Insurance Services Office (ISO) form CG 00 01 (occurrence) or CG 00 02 (claims-made); the edition tested is CG 00 01 04 13. Under Coverage A the insurer agrees to pay "those sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage" to which the insurance applies, and to defend any suit seeking those damages.

The single dividing line for Coverage A is legal obligation. The CGL is third-party coverage: the claimant is always someone other than the named insured, and the insured must be legally liable before damages are paid. Coverage A never repairs the insured's own property or pays the insured's own injuries.

Key Definitions (Memorize Exactly)

Bodily injury (BI) is physical harm, sickness, or disease sustained by a person, including death resulting from any of these. Mental anguish counts as BI only when it flows from a physical injury; standalone emotional distress generally is not BI under the unendorsed form.

Property damage (PD) has two distinct parts the exam loves to separate:

Trap: Electronic data is not tangible property, so corrupting a customer's database is not PD under the standard CGL. Loss of use of undamaged property is deemed to occur at the time of the occurrence that caused it.

The Occurrence Requirement

Coverage A applies only to BI/PD caused by an occurrence, defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." The word accident is what excludes deliberate harm.

• Customer trips on an unmarked step: occurrence (an accident).
• A slow roof leak ruins a tenant's inventory over months: occurrence (continuous exposure).
• An employee deliberately punches a customer: not an occurrence (expected or intended).

Two Hazard Groups Within Coverage A

Premises-Operations

BI/PD arising from the ownership, maintenance, or use of premises and from ongoing operations, on or away from the insured's location. A slip on a wet store floor or a tool dropped on a passerby mid-job both fall here.

Products-Completed Operations Hazard (PCOH)

BI/PD arising away from premises the insured owns or rents and out of the insured's product or completed work. Work is "completed" at the earliest of: all contracted work is done; all work at the site is done; or that portion is put to its intended use.

Why the split matters financially: premises-operations losses erode the General Aggregate, while products-completed operations losses erode a separate Products-Completed Operations Aggregate. A business with heavy product exposure therefore has two distinct pools of aggregate protection.

CGL Coverage A: The Insuring Agreement

Coverage A of the Commercial General Liability (CGL) policy pays sums the insured becomes legally obligated to pay as damages because of bodily injury (BI) or property damage (PD) to which the insurance applies, and it provides a defense. Coverage applies only when the BI or PD is caused by an occurrence — defined as an accident, including continuous or repeated exposure to substantially the same general harmful conditions — and the injury or damage occurs during the policy period within the coverage territory.

Bodily injury means physical injury, sickness, or disease, including resulting death; property damage means physical injury to tangible property (including loss of use of that property) or loss of use of tangible property that is not physically injured. The "occurrence" trigger means expected or intended harm is not covered — a crucial line the exam tests against the "accident" requirement.

Defense Costs, Premises/Operations, and Products-Completed Operations

A defining feature of the CGL is that defense costs are paid in addition to the limits — they do not erode the per-occurrence or aggregate limit — and the insurer's duty to defend ends when the applicable limit is exhausted by payment of judgments or settlements. The duty to defend is broader than the duty to indemnify: the insurer must defend any suit seeking covered damages even if the allegations are groundless, false, or fraudulent.

Coverage A responds to two principal exposures, tracked by separate aggregate limits:

• Premises and Operations — liability arising from the insured's premises and ongoing business operations (a customer slipping in the store, damage caused while performing work).
• Products and Completed Operations — liability arising after the insured's product has left its control or work is completed, occurring away from owned premises. This exposure has its own Products-Completed Operations Aggregate, separate from the General Aggregate.

Understanding that defense is outside the limits, that "occurrence" excludes intended harm, and that products-completed operations carries its own aggregate covers the most-tested Coverage A points.

Four Conditions for Coverage A to Apply

All four must be met:

1. BI/PD caused by an occurrence;
2. Occurring during the policy period;
3. Within the coverage territory;
4. No insured knew the injury had occurred before the policy began (the known-loss / known-injury provision).

Coverage Territory

Coverage A applies to injury in the United States (including its territories and possessions), Puerto Rico, and Canada; international waters or airspace during transit between those places; and on a worldwide basis for the insured's products made or sold in the U.S./Canada and for short business trips by a person whose home is in the territory, provided the suit is brought within the coverage territory.

Damages Covered vs. Not Covered

The Known-Loss Provision in Practice

Worked example: A manufacturer learns in November that a batch of products is leaking a corrosive chemical and damaging customers' equipment, then buys a CGL effective January 1. Damage that continues into the new policy year is deemed known and is not covered, because knowledge existed before inception. Coverage A is meant for fortuitous (accidental, uncertain) losses, not losses the insured has already discovered.

Classifying a Loss — the Timing Test