10.1 CGL Coverage A: Bodily Injury and Property Damage Liability

The CGL Policy and Coverage A

The Commercial General Liability (CGL) policy is built on ISO form CG 00 01 (commercial general liability coverage form), most exam states test the CG 00 01 04 13 edition. The CGL contains three insuring agreements lettered A, B, and C. Coverage A is the core grant: the insurer pays "those sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies."

Four elements must all be present for Coverage A to respond:

1. Bodily injury or property damage as defined,
2. caused by an occurrence (an accident, including continuous or repeated exposure to substantially the same harmful conditions),
3. that takes place in the coverage territory, and
4. during the policy period (occurrence trigger).

No single element standing alone triggers coverage. A common exam trap: an intentional, expected act is not an "accident," so it is not an occurrence and Coverage A does not apply.

Defining Bodily Injury and Property Damage

Bodily injury (BI) means bodily injury, sickness, or disease sustained by a person, including death resulting from any of these. Purely emotional or mental injury without physical harm is generally outside the definition unless it flows from a physical injury.

Property damage (PD) means: (1) physical injury to tangible property, including resulting loss of use; or (2) loss of use of tangible property that is not physically injured. Tested distinction: economic loss alone, or damage to intangible property such as data or goodwill, is not PD. A roof that leaks and ruins a customer's inventory is physical injury to tangible property; a delay that idles a factory with no physical damage is loss of use only.

Occurrence Trigger and the Coverage Territory

The standard CG 00 01 is written on an occurrence basis. The trigger is when the BI or PD takes place, not when the act was committed or the claim was made. Example: a contractor installs faulty wiring in 2024; a fire from that wiring injures a tenant in 2026. The 2026 policy responds because that is when the bodily injury occurred.

The alternative claims-made form, CG 00 02, is triggered by when the claim is first made, subject to a retroactive date. A claims-made trap: a claim made during the policy period for an injury that happened before the retroactive date is not covered.

Coverage territory includes the U.S. (including its territories and possessions), Puerto Rico, and Canada, plus international waters/airspace in transit, and a limited extension for products made or sold in the territory and for the insured's employees traveling abroad on business.

How Coverage A Limits Apply

Coverage A losses are subject to two key limits. The Each Occurrence Limit caps all BI and PD from any one occurrence (commonly $1,000,000). The General Aggregate Limit (commonly $2,000,000) is the most the insurer pays for the sum of: medical payments, Coverage A damages except products-completed operations, and Coverage B. A separate Products-Completed Operations Aggregate applies to that hazard.

Worked example: A warehouse explosion injures four customers; four suits settle for $400,000 each ($1,600,000 total). Because all four arise from one occurrence, the $1,000,000 Each Occurrence Limit caps the insurer's payment at $1,000,000, leaving $600,000 uninsured even though the $2,000,000 aggregate is not exhausted.

Coverage A: The Core CGL Grant

CGL Coverage A pays sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which the insurance applies, and the insurer has the right and duty to defend. Coverage applies only if the injury or damage is caused by an occurrence in the coverage territory during the policy period (for the occurrence form). The defense duty is broad: the insurer must defend even a groundless or fraudulent suit, and defense costs are usually outside the limit, so the practical value of Coverage A often exceeds the stated per-occurrence limit.

Occurrence Defined and the Coverage Territory

An occurrence is an accident, including continuous or repeated exposure to substantially the same general harmful conditions; it is not a single instantaneous event only, which is why ongoing exposure (such as repeated fume inhalation) can be one occurrence. The coverage territory includes the United States, its territories and possessions, Puerto Rico, and Canada, plus international coverage for products made or sold in the territory, the activities of a person away for a short time on the insured's business, and internet-based activities, provided suit is brought in the territory.

These definitions decide whether a loss is even within the grant.

Bodily Injury and Property Damage in the Commercial Context

Bodily injury means physical injury, sickness, or disease, including death; property damage means physical injury to tangible property including resulting loss of use, or loss of use of tangible property not physically injured. The CGL is designed for third-party liability, so it does not cover the insured's own property or damage to the insured's own product or completed work (the business-risk exclusions), which is why faulty workmanship that damages only the insured's own work is generally not covered. Distinguishing third-party harm from the insured's own business risk is central to Coverage A questions.

How Coverage A Limits Apply

Coverage A losses are capped first by the per-occurrence limit, then aggregated against the general aggregate, except that products-completed-operations losses run against a separate products-completed-operations aggregate. Defense costs are paid in addition to the limits and do not erode them (unlike some claims-made professional forms). A scenario with multiple bodily-injury claims arising from one accident is testing the per-occurrence cap, while a series of unrelated occurrences over the year is testing the general aggregate.

Tracing each claim to the correct limit, and remembering that defense is usually outside the limit, is the key analytical skill.