10.1 CGL Coverage A: Bodily Injury and Property Damage Liability
Key Takeaways
- Coverage A pays sums the insured is legally obligated to pay as damages for bodily injury or property damage, and provides a duty to defend.
- The standard form is ISO CG 00 01 (occurrence trigger), current edition CG 00 01 04 13; CG 00 02 is the claims-made version.
- Bodily injury and property damage must arise from an occurrence, defined as an accident including continuous or repeated exposure to harmful conditions.
- Property damage includes physical injury to tangible property (with loss of use) and loss of use of undamaged property; electronic data is not tangible property.
- The occurrence trigger covers losses during the policy period regardless of when the claim is reported; claims-made requires a trigger after the retroactive date.
What Coverage A Insures
Commercial General Liability (CGL) insurance is the standard third-party liability contract for most businesses. Coverage A is its centerpiece: the insurer agrees to pay "those sums the insured becomes legally obligated to pay as damages" because of bodily injury (BI) or property damage (PD) to which the insurance applies.
A separate promise rides alongside the duty to pay: the duty to defend. The insurer must defend any suit seeking covered damages, even if the allegations are groundless, false, or fraudulent.
The key exam idea is that the CGL is third-party coverage. The claimant is always someone other than the named insured. Damage to the insured's own building or stock belongs on a commercial property policy, not here.
The Standard ISO Form
The contract is an Insurance Services Office (ISO) form. Two triggers exist:
| Form | Trigger |
|---|---|
| CG 00 01 | Occurrence |
| CG 00 02 | Claims-made |
The current tested edition is CG 00 01 04 13 (the 04 13 stands for April 2013).
Bodily Injury and Property Damage
Bodily injury (BI) is physical harm, sickness, or disease sustained by a person, including death resulting from any of these. Mental anguish counts only when it flows from a physical injury; standalone emotional distress with no physical component is generally not BI under the unendorsed form.
Property damage (PD) has two distinct parts:
| Part | Definition | Example |
|---|---|---|
| Physical injury to tangible property | Actual damage, plus resulting loss of use | A delivery van scrapes a client's parked car |
| Loss of use of undamaged property | Property is not harmed but cannot be used | Your scaffold blocks a tenant's storefront for a week |
Trap: Electronic data is not tangible property in the unendorsed CGL, so corrupting a customer's database is not PD. Loss of use is deemed to occur at the time of the occurrence that caused it.
The Occurrence Requirement
Coverage A responds only to BI or PD caused by an occurrence, defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Gradual pollution or repeated exposure can therefore qualify as a single occurrence rather than many separate accidents.
A contractor's CGL Coverage A responds to a claim only when the bodily injury or property damage is caused by an occurrence. Which definition best matches 'occurrence' under the standard CG 00 01?
When Coverage Attaches
The trigger decides which policy pays. This is the single most-tested concept in the chapter.
Occurrence Trigger (CG 00 01)
The policy in force when the BI or PD happens responds, no matter how many years later the claim is filed. A 2024 occurrence reported in 2030 is the 2024 policy's claim.
Claims-Made Trigger (CG 00 02)
Two conditions must both be met: the BI/PD must occur on or after the retroactive date, and the claim must be first made during the policy period (or an extended reporting period).
Worked Trigger Example
A roofing contractor finishes a job in 2024. In 2027 the roof leaks and ruins a homeowner's furniture.
- Occurrence form: the PD happens in 2027, so the 2027 policy responds.
- Claims-made form: the policy in force when the homeowner's claim is first made (2027) responds, provided 2027 is on or after the retroactive date.
Trap: On a claims-made policy, BI/PD that occurs before the retroactive date is never covered, even if reported during the policy period.
An occurrence-based CGL ran from January 1 to December 31, 2024. Property damage happens on a job in 2024 but the lawsuit is not filed until 2028. Which statement is correct?
Defense Is Broader Than Indemnity
The duty to defend is broader than the duty to pay. An insurer must defend whenever the allegations could fall within coverage, even if the suit later proves baseless. The duty ends only when the applicable limit is exhausted by payment of judgments or settlements.
Defense costs are Supplementary Payments paid in addition to the limit (covered in Section 10.3), so a long, expensive defense does not by itself reduce the money available to pay a claimant.
Coverage A Exclusion Pitfalls
Coverage A is a broad grant narrowed by roughly fifteen lettered exclusions. The most-tested:
| Exclusion | What it bars | Frequent trap |
|---|---|---|
| Expected or intended injury | Harm the insured intended | Reasonable force to protect persons or property is an exception |
| Contractual liability | Liability assumed in a contract | The insured-contract exception restores common business contracts |
| Workers compensation / employers liability | Injury to employees | Belongs on a WC or EL policy, not the CGL |
| Pollution | Most pollution releases | Narrow exceptions exist for hostile-fire products |
| Damage to your own work or product | Faulty workmanship | The CGL is not a performance warranty |
Trap: The CGL is not a guarantee of the insured's own work. Repairing the insured's defective product is the insured's business cost, not a covered occurrence.
Premises-Operations vs. Products-Completed Operations
Coverage A bodily injury and property damage divides into two hazard groups, and each erodes a different aggregate.
| Hazard | When it applies | Aggregate eroded |
|---|---|---|
| Premises-Operations | Injury at the insured's location or during ongoing work | General Aggregate |
| Products-Completed Operations Hazard (PCOH) | Injury after work is finished or away from premises from a product | PCOH Aggregate |
Work is considered completed at the earliest of: when all work in the contract is done, when the portion put to its intended use is done, or when the insured abandons the job. A roof that leaks months after the contractor leaves is a completed-operations claim, not premises-operations.