CGL Coverage A: Bodily Injury and Property Damage Liability

CGL Coverage A: Bodily Injury and Property Damage Liability

The Commercial General Liability (CGL) policy is built on standardized ISO forms. The most-tested base form is the Occurrence form CG 00 01 (current edition CG 00 01 04 13); the alternative is the Claims-Made form CG 00 02. Coverage A 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 gives the insurer the right and duty to defend. The duty to defend ends when the insurer has used up the applicable limit paying judgments or settlements.

The Coverage Trigger: "Occurrence" and "Coverage Territory"

Coverage A applies only when the BI or PD is caused by an occurrence — an accident, including continuous or repeated exposure to substantially the same harmful conditions. The injury or damage must take place in the coverage territory (US, its territories, Canada, and international waters/airspace in transit between them) and must occur during the policy period. On the occurrence form, the trigger is when the injury happens, no matter when the claim is filed — so a 2026 policy can still owe for a 2026 injury reported in 2031.

Occurrence vs. Claims-Made (a top exam trap)

Do not confuse the two triggers. The chart below is heavily tested:

Claims-made adds a Retroactive Date (injury before it is excluded) and an Extended Reporting Period (ERP) — a basic 5-year automatic tail plus an optional supplemental unlimited tail bought by endorsement.

The Limits Structure (worked numbers)

The CG 00 01 declarations stack several limits. The General Aggregate is the most the insurer pays for the policy term (Coverage A + B + Medical Payments), except product/completed-operations losses, which erode the separate Products-Completed Operations Aggregate. Within the General Aggregate sits the Each Occurrence limit, and inside that the Damage to Premises Rented to You (fire legal) limit and the Medical Payments limit.

• General Aggregate: $2,000,000
• Products-Completed Ops Aggregate: $2,000,000
• Each Occurrence: $1,000,000
• Damage to Premises Rented to You: $100,000 (per premises)
• Medical Payments: $5,000 (per person)

Worked example — aggregate erosion

A contractor has a $2,000,000 General Aggregate and a $1,000,000 Each Occurrence limit. During the year three separate non-products claims pay $800,000, $700,000, and $900,000.

• Claim 1 pays $800,000 (under the $1M occurrence cap) → aggregate remaining $1,200,000.
• Claim 2 pays $700,000 → aggregate remaining $500,000.
• Claim 3 is valued at $900,000 but only $500,000 of aggregate is left, so the insurer pays $500,000 — even though the occurrence limit is $1M.

The lesson: an individual loss can be capped by the aggregate, not just the per-occurrence limit, once prior claims have eroded the pool.

The Insuring Agreement and the Duty to Defend

Coverage A promises to pay sums the insured becomes legally obligated to pay as damages for bodily injury or property damage caused by an occurrence within the coverage territory during the policy period. An occurrence is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Expected or intended injury is excluded — the policy covers negligence, not deliberate harm.

The insurer's duty to defend is broader than its duty to pay: it must defend any suit seeking covered damages even if the allegations are groundless, false, or fraudulent. Defense costs are paid in addition to the limits, and the duty ends once the applicable limit is exhausted by payment of judgments or settlements.

Coverage Territory and the Products-Completed Operations Hazard

The products-completed operations exposure is critical because a contractor's faulty work can cause injury long after the job ends, and it draws against a separate aggregate. Recognizing that defense is outside the limits, that "occurrence" requires an accident, and that products-completed operations has its own aggregate explains the structure of nearly every Coverage A scenario the exam presents.

Premises-Operations vs. Products-Completed Operations

Coverage A bundles two distinct exposures. Premises and operations liability covers injury occurring at the insured's location or during ongoing work — a customer slipping in the store or being struck during an active job. Products-completed operations covers injury occurring away from the premises after work is finished or the product has left the insured's control. The two draw against different aggregates and are rated separately, which is why a contractor must confirm the products-completed operations aggregate is adequate for latent defects that surface after project completion.

Key Coverage A Exclusions

Coverage A is broad but carries standard exclusions tested on the national exam:

• Expected or intended injury (except reasonable force to protect persons/property)
• Contractual liability (with an exception for insured contracts like leases)
• Liquor liability (only if the insured is in the liquor business)
• Workers compensation / employers liability — employees are covered by WC, not CGL
• Pollution, aircraft/auto/watercraft, mobile equipment used in racing
• Damage to your product / your work and impaired property (these push insureds toward products coverage and contractor's endorsements)

The auto exclusion is why a business needs a separate Commercial Auto policy; CGL is for premises, operations, and products, not owned vehicles.