10.2 CGL Coverage B: Personal and Advertising Injury, Coverage C: Medical Payments
Key Takeaways
- Coverage B insures personal and advertising injury arising from seven enumerated offenses such as libel, slander, false arrest, and copyright or slogan infringement in advertising.
- Coverage B addresses non-physical harm to reputation, privacy, and intellectual property, unlike Coverage A's physical-injury focus.
- Coverage C, Medical Payments, pays reasonable medical expenses without regard to the insured's fault, typically up to about $5,000 per person.
- Coverage C is goodwill coverage that often heads off a larger Coverage A negligence suit by settling minor injuries promptly.
- Coverage C excludes the named insured, employees injured in the course of employment, and tenants of the insured.
A Different Kind of Harm
Coverage B insures liability for personal and advertising injury (P&AI) caused by an enumerated offense arising out of the insured's business. Where Coverage A is about physical harm, Coverage B addresses non-physical wrongs: damage to reputation, invasion of privacy, and certain advertising and intellectual-property torts.
The Seven Listed Offenses
The ISO definition lists exactly seven offenses. Memorize them:
| # | Offense | Plain-English example |
|---|---|---|
| 1 | False arrest, detention, or imprisonment | Store guard wrongly detains a shopper |
| 2 | Malicious prosecution | Filing a baseless criminal complaint |
| 3 | Wrongful eviction or invasion of private occupancy | Landlord illegally locks out a tenant |
| 4 | Libel or slander, or disparagement of goods | Falsely calling a rival's product unsafe |
| 5 | Violation of a person's right of privacy | Publishing private facts about a customer |
| 6 | Use of another's advertising idea in your ad | Copying a rival's distinctive campaign |
| 7 | Infringing a copyright, trade dress, or slogan in your ad | Stealing a competitor's tagline |
Trap: Offenses 6 and 7 require an advertisement; the first five do not. A defamatory remark made outside any advertising can still trigger offense 4.
Common Coverage B Denials
Coverage B contains its own exclusions. The most tested:
- Knowing falsehood: P&AI caused by the insured knowing the statement was false is excluded. Repeating a defamatory claim you knew to be untrue is not covered.
- Prior publication: material first published before the policy period.
- Criminal acts and breach of contract (with limited exceptions).
- Intellectual-property infringement generally is excluded except the narrow advertising offenses listed in 6 and 7. A patent-infringement suit is not covered.
How the Limit Works
The Personal & Advertising Injury Limit (often $1,000,000) is the most the insurer pays for all P&AI sustained by any one person or organization. P&AI losses also erode the General Aggregate.
Trap: A pure patent or trademark dispute is excluded; only copyright, trade dress, and slogan in your advertisement fall under offense 7.
A retailer runs a print ad that copies a competitor's distinctive slogan. The competitor sues for slogan infringement in advertising. Which CGL coverage, if any, responds?
No-Fault Goodwill Coverage
Coverage C, Medical Payments, pays reasonable 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.
Its defining feature is that it pays without regard to the insured's legal liability. This is the opposite of Coverage A, which requires the insured to be legally obligated to pay. The standard limit is about $5,000 per person.
Why It Exists and What It Pays
Coverage C is goodwill coverage. Promptly paying a small medical bill often prevents a much larger Coverage A negligence suit. Covered costs include first aid at the scene; medical, surgical, X-ray, and dental services; ambulance and hospital charges; and funeral expenses. Expenses must generally be incurred and reported within one year of the accident.
Who Is Excluded From Coverage C
| Excluded person | Reason |
|---|---|
| The named insured / partners | Not a third party |
| Employees injured on the job | Workers compensation responds |
| Tenants of the insured | Treated as occupants, not the public |
| Anyone in business pursuits on the premises | Outside the public-goodwill purpose |
A customer trips on a store display and sprains a wrist. The store was not negligent. How does Coverage C respond compared with Coverage A?
Distinct Limits, Shared Aggregate
Coverage B and Coverage C each carry their own limit but both feed the General Aggregate.
| Coverage | Per-claim limit | Aggregate eroded |
|---|---|---|
| B (P&AI) | ~$1,000,000 per person/organization | General Aggregate |
| C (Med Pay) | ~$5,000 per person | General Aggregate |
Notice neither B nor C touches the Products-Completed Operations Aggregate, which is reserved for product and completed-work injury claims under Coverage A.
Coverage C and Coverage A Together
A single accident can implicate both Coverage C and Coverage A. The medical-payments insurer can pay a customer's emergency-room bill under Coverage C and, if the customer later sues and wins, Coverage A pays the damages. To prevent a windfall, any Coverage C payment is generally credited against what the same claimant later recovers under Coverage A for the same injury.
Worked example: Coverage C pays $4,000 of a claimant's medical bills. The claimant then sues and wins $50,000 under Coverage A. The insurer's total outlay reflects a credit for the $4,000 already paid, so the same medical cost is not paid twice.
Exam Shortcut
- Reputation, privacy, advertising wrongs: Coverage B.
- Small bills paid regardless of fault: Coverage C.
- Negligence damages the insured is legally obligated to pay: Coverage A.
Reporting and Time Conditions
Coverage C carries strict timing rules a producer must explain to clients. The injured person must submit to examination by a physician of the insurer's choice as often as reasonably required, and the expense must be incurred and reported within one year of the accident date. Missing that window can forfeit an otherwise valid medical-payments claim even when fault is not in dispute.
Trap: Coverage C is not health insurance and is not triggered by illness alone; the bodily injury must result from an accident connected to the premises, adjoining ways, or operations.