3.4 Indiana General Liability Insurance

Commercial General Liability (CGL)

Most businesses buy the ISO Commercial General Liability form. It bundles three insuring agreements.

Coverage A — Bodily Injury & Property Damage

Pays sums the insured is legally obligated to pay as damages for third-party bodily injury or property damage caused by an occurrence (an accident, including continuous exposure). It includes:

• Premises and operations — a customer slips in the store.
• Products liability — a sold product injures a user.
• Completed operations — finished work later causes harm.

Defense is outside the limits: legal defense costs are paid in addition to the policy limit, and the insurer's duty to defend is broader than its duty to indemnify. Defense ends once the limit is exhausted by payment of judgments/settlements.

Coverage B — Personal & Advertising Injury

Covers specified offenses (no physical injury needed):

• Libel, slander, and disparagement
• False arrest, detention, or imprisonment
• Malicious prosecution
• Wrongful eviction or invasion of privacy
• Copyright/slogan/trade-dress infringement in the insured's advertisement

Coverage C — Medical Payments

No-fault payments for minor injuries to non-employees on the premises, regardless of the insured's liability, typically $5,000-$10,000 per person. Paying small medical bills early can head off larger liability suits.

The general aggregate caps most claims for the policy year; products/completed operations has its own separate aggregate, so a product recall season does not erode premises coverage.

Exam Tip: Coverage A = bodily injury/property damage; Coverage B = personal & advertising injury; Coverage C = med pay. Know which agreement responds to a slip-and-fall (A) versus a defamation suit (B).

Coverage Triggers: Occurrence vs. Claims-Made

The trigger decides which policy year responds.

Worked example: A product sold in 2024 injures someone in 2026, with suit filed in 2027. Under an occurrence policy, the 2026 policy (when injury occurred) responds. Under a claims-made policy, the 2027 policy (when the claim was made) responds — but only if 2024 is on or after the retroactive date.

Tail and Nose Coverage

• Tail (Extended Reporting Period, ERP): added when a claims-made policy ends, allowing claims reported after expiration for acts during the policy period.
• Nose (prior-acts coverage): a new claims-made policy can pick up acts before its inception by setting an earlier retroactive date.

Professional Liability (Errors & Omissions)

E&O covers financial harm from a professional's negligent act, error, or omission in rendering services — distinct from CGL, which addresses bodily injury and property damage. It is almost always claims-made. Typical buyers include insurance agents, accountants, attorneys, IT consultants, and real-estate professionals. Indiana producers carry E&O to protect against client suits over coverage advice.

Umbrella vs. Excess Liability

Umbrellas require minimum underlying limits (e.g., $1M CGL / specified auto limits). If underlying limits drop below requirements, the umbrella may treat the gap as the insured's responsibility.

Indiana Comparative Fault in Liability Claims

The state's 51% bar (Indiana Code 34-51-2-6) shapes defense strategy. If the claimant is 51% or more at fault, recovery is barred entirely; below that, damages reduce by the claimant's fault share. Defense counsel for an insured therefore works to shift fault percentage onto the plaintiff. Note the government-defendant exception: those cases retain contributory negligence, where any plaintiff fault bars recovery.

Exam Tip: Occurrence = when injury occurs; claims-made = when claim is made. The retroactive date and the tail (ERP) only matter for claims-made forms.

Key CGL Exclusions the Exam Tests

A CGL is broad but not unlimited. Knowing what it does not cover is as testable as what it does:

• Expected or intended injury — deliberate harm by the insured is excluded.
• Contractual liability — except liability assumed under an insured contract.
• Workers' compensation / employer's liability — bodily injury to employees belongs to the comp and employers'-liability lines, not CGL.
• Auto, aircraft, and watercraft — covered under separate auto/aviation/marine policies.
• Pollution — broadly excluded; addressed by separate environmental coverage.
• Damage to the insured's own product or work — the "business risk" exclusions; CGL is third-party coverage, not a performance warranty.

Because CGL is third-party insurance, it never pays the insured for the insured's own losses — a point candidates must keep separate from first-party property coverage.

Choosing Limits and Layers

A business sets a per-occurrence limit and an aggregate. When exposure exceeds the primary aggregate, the insured adds layers:

1. Primary CGL — first dollars after any deductible.
2. Umbrella — broad excess that can also drop down to fill gaps, subject to a self-insured retention for coverages the primary did not include.
3. Excess (follow-form) — additional limits only, mirroring the umbrella or primary below it.

Worked Limit Example

A contractor carries $1M/$2M CGL plus a $5M umbrella. A covered judgment of $3M is paid: the first $1M from the CGL occurrence limit, the next $2M from the umbrella. The general aggregate then drops to $1M for the rest of the year, so further large claims may pierce into the umbrella again.

Indiana Defense Reality

Because defense costs sit outside the CGL limit and the 51% comparative-fault bar governs, insurers in Indiana invest heavily in establishing the plaintiff's share of fault. Pushing a plaintiff to 51% defeats the claim entirely, which is the single most powerful defense lever in Indiana liability litigation — and a favorite scenario on the casualty exam.