10.1 CGL Coverage A: Bodily Injury and Property Damage Liability
Key Takeaways
- Coverage A (ISO CG 00 01 04 13) pays sums the insured is legally obligated to pay as damages for BI or PD caused by an occurrence, with defense costs paid outside the limits.
- An occurrence is an accident, including continuous or repeated exposure to substantially the same harmful conditions; property damage includes loss of use of undamaged tangible property.
- Premises-operations claims draw on the General Aggregate; products-completed operations claims draw on a SEPARATE Products-Completed Operations Aggregate.
- The Each Occurrence limit caps any single occurrence regardless of which aggregate applies.
- The known-loss provision bars coverage for injury any insured knew about before the policy began; coverage territory is U.S./Canada, expanded worldwide for products if suit is filed in the U.S. or Canada.
The Standard ISO CGL Form
The Commercial General Liability policy on the exam is the ISO form CG 00 01 (current edition 04 13). It is written on an occurrence trigger by default; a separate CG 00 02 provides a claims-made version. The insuring agreement of Coverage A states the insurer will pay "those sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies."
Two duties flow from this grant: the duty to pay damages and the duty to defend. Defense costs are paid in addition to the limits of insurance (outside the limits) — a heavily tested distinction from auto liability, where defense is also outside limits, and from many professional liability forms where defense erodes the limit.
The Occurrence Trigger
Coverage A responds only to BI or PD caused by an occurrence that takes place in the coverage territory during the policy period. The CGL defines an occurrence as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." The key word is accident — neither expected nor intended from the standpoint of the insured.
Three definitions you must memorize cold:
| Term | CGL Definition (paraphrased) |
|---|---|
| Bodily injury | Physical injury, sickness, or disease, including death resulting at any time |
| Property damage | Physical injury to tangible property (incl. loss of use) OR loss of use of tangible property not physically injured |
| Occurrence | An accident, including continuous or repeated exposure to the same harmful conditions |
Note that loss of use of undamaged property is property damage. If the insured's excavation blocks access to a neighbor's intact store, that lost use is PD even though nothing was physically broken.
Two Hazard Groups and the Aggregate Structure
Coverage A combines two hazard groups under one insuring agreement:
- Premises-Operations — liability arising from the insured's premises and ongoing work. A scaffold collapses while the crew is building. This hazard shares the General Aggregate.
- Products-Completed Operations — liability arising after the product leaves the insured's control or the work is put to its intended use. The roof is finished in January and leaks in June. This hazard is capped by its own separate Products-Completed Operations Aggregate.
The declarations show four limits that interact:
| Limit | Typical Amount | Applies To |
|---|---|---|
| Each Occurrence | $1,000,000 | Any single occurrence (A + C combined) |
| General Aggregate | $2,000,000 | All A (premises-ops) + B + C in the period |
| Products-Completed Ops Aggregate | $2,000,000 | All completed-operations claims |
| Damage to Premises Rented to You | $300,000 | Fire/specified perils to rented premises |
The General Aggregate does not cap products-completed operations — that hazard has its own bucket. This is a classic trap.
Worked Limit Application
Assume Each Occurrence = $1,000,000, General Aggregate = $2,000,000, Products-Comp-Ops Aggregate = $2,000,000.
During the year the insured has these losses:
- Premises slip-and-fall judgment: $900,000 (premises-ops).
- Second premises occurrence: $1,300,000 — pays only $1,000,000 (capped by Each Occurrence; the extra $300,000 is uninsured).
- A completed-operations products claim: $1,500,000.
The two premises claims draw on the General Aggregate: $900,000 + $1,000,000 = $1,900,000, leaving $100,000 of General Aggregate. The $1,500,000 products claim draws on the separate Products-Completed Ops Aggregate and is paid in full (subject to the $1,000,000 Each Occurrence — so it actually pays $1,000,000, $500,000 uninsured). Memorize: products claims never touch the General Aggregate.
The Known-Loss Provision and Coverage Territory
Coverage A applies only if, before the policy period, no insured listed under "Who Is an Insured" knew the BI or PD had occurred. This known-loss / known-injury rule (the CG 00 01 04 13 "knowledge" trigger) prevents buying coverage for a loss already in progress. Once any insured knows of injury, it is deemed known to all insureds, and continuation of that injury is also deemed known.
The coverage territory includes the U.S., its territories and possessions, Puerto Rico, and Canada; international waters/airspace during transit between those places; and — for products-completed operations only — worldwide, provided the suit is brought within the U.S. or Canada. A products injury occurring in Germany is covered if the lawsuit is filed in a U.S. court.
A contractor finishes a parking-garage repair in March. In September a slab fails and injures a pedestrian. Which Coverage A hazard responds and which aggregate caps it?
Which of the following is 'property damage' under CGL Coverage A?
Occurrence vs. Claims-Made: Why the Trigger Matters
The default CGL (CG 00 01) is occurrence-based: coverage attaches if the BI or PD occurs during the policy period, no matter when the claim is reported. A policy in force in 2024 covers a 2024 injury even if the lawsuit is filed in 2029. This is ideal for long-tail exposures like construction defects or latent toxic injuries.
The alternative claims-made form (CG 00 02) attaches when the claim is first made during the policy period (and after the retroactive date). Claims-made forms add concepts the exam tests: the retroactive date (no coverage for occurrences before it), the extended reporting periods (a Basic automatic ERP plus an optional Supplemental "tail"), and laser dates that limit prior-acts coverage. When you switch carriers, matching retroactive dates prevents a coverage gap.
The Self-Contained Definition of "Insured Contract"
Coverage A's contractual-liability exclusion is given back for liability assumed in an insured contract. The CGL defines six categories, the most tested being a written lease of premises, an easement/license agreement, an obligation to indemnify a municipality, and the catch-all: the part of any contract under which the insured assumes another party's tort liability for BI or PD to a third person. A subcontractor who signs a hold-harmless agreement covering the general contractor's liability has entered an insured contract, so the assumed liability is covered.