10.1 CGL Coverage A: Bodily Injury and Property Damage Liability
Key Takeaways
- Coverage A insures BI and PD caused by an occurrence within the coverage territory; ISO forms are CG 00 01 (occurrence) and CG 00 02 (claims-made).
- Occurrence forms trigger on when injury happens; claims-made forms trigger on when a claim is made and rely on a retroactive date.
- Bodily injury includes resulting death; property damage includes loss of use, but electronic data is generally not tangible property.
- The Each Occurrence Limit caps total BI + PD (and Coverage C medical payments) from any single occurrence regardless of the number of claimants.
CGL Coverage A: Bodily Injury and Property Damage Liability
The Commercial General Liability (CGL) Coverage Form is published by the Insurance Services Office (ISO). The two principal versions tested on the national exam are the occurrence form (ISO form CG 00 01) and the claims-made form (ISO form CG 00 02). Recent editions you should recognize include CG 00 01 04 13 and the current CG 00 01 12 24. Coverage A is the heart of the policy, insuring the business against liability it becomes legally obligated to pay because of bodily injury or property damage caused by an occurrence.
An occurrence is defined as an accident, including continuous or repeated exposure to substantially the same harmful conditions. The accident must cause bodily injury or property damage during the policy period, and the injury or damage must take place within the coverage territory (generally the U.S., its territories and possessions, Puerto Rico, and Canada).
Defining the Insured Perils
Bodily injury (BI) means physical injury, sickness, or disease sustained by a person, including death that results at any time. Property damage (PD) has two prongs: (1) physical injury to tangible property, including resulting loss of use; and (2) loss of use of tangible property that is not physically injured. Note the exam trap: electronic data is generally not tangible property, so corruption of a customer's data is usually not covered PD under the unmodified form.
Coverage Triggers: Occurrence vs. Claims-Made
The distinction between trigger types is heavily tested:
| Feature | Occurrence (CG 00 01) | Claims-Made (CG 00 02) |
|---|---|---|
| Trigger | Injury occurs during policy period | Claim first made during policy period |
| Retroactive date | Not used | Critical; bars pre-date injuries |
| Tail coverage | Not needed | Extended Reporting Periods (ERPs) |
| Premium early years | Higher | Lower (matures over ~5 yrs) |
Claims-made forms use a retroactive date: injury occurring before that date is excluded even if the claim is filed during the policy period. When a claims-made policy ends, the insured may need a Basic ERP (automatic 5-year tail for claims, 60-day report window for occurrences) or buy a Supplemental ERP.
Worked Example: Damages vs. Limit
A contractor's CGL has a $1,000,000 Each Occurrence Limit and a $2,000,000 General Aggregate. A scaffolding collapse injures three pedestrians during one occurrence, producing judgments of $400,000, $350,000, and $500,000 (total $1,250,000). Because all three injuries arise from a single occurrence, the insurer pays only up to the Each Occurrence Limit of $1,000,000; the insured is personally responsible for the remaining $250,000. The $1,000,000 paid then reduces the General Aggregate to $1,000,000 remaining for the rest of the policy year.
Remember: the Each Occurrence Limit is the most paid for the combined BI and PD from any one occurrence, including any Coverage C medical payments arising from that occurrence.
Under CGL Coverage A, a claims-made form (CG 00 02) excludes bodily injury that occurs before which key date even if the claim is reported during the policy period?
A CGL policy has a $1,000,000 Each Occurrence Limit. A single accident injures four people with combined damages of $1,300,000. How much does the insurer pay for this occurrence?
The Insuring Agreement and the Duty to Defend
CGL Coverage A promises to pay sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage caused by an occurrence in the coverage territory during the policy period. Crucially, the insurer also has the right and duty to defend any suit seeking those damages — even a groundless, false, or fraudulent suit. Defense costs are paid in addition to the limits, and the duty to defend ends only when the applicable limit is exhausted by payment of judgments or settlements. The duty to defend is broader than the duty to indemnify.
Occurrence, Trigger, and the Expected-or-Intended Bar
An occurrence is 'an accident, including continuous or repeated exposure to substantially the same general harmful conditions.' This wording reaches gradual injury (e.g., long-term exposure) as a single occurrence. The form excludes injury expected or intended from the standpoint of the insured, except reasonable force to protect persons or property. On the standard CG 00 01, coverage is occurrence-triggered — the injury or damage must take place during the policy period, regardless of when the claim is later filed — which drives the long-tail products and completed-operations exposure.
A CGL insurer receives a lawsuit it believes is completely groundless. What must it do under Coverage A?
Coverage Territory and the 'Products-Completed Operations Hazard'
Coverage A applies in the coverage territory — the U.S., its territories, Canada, and international waters/airspace between, plus worldwide for products sold in the U.S. and for an insured's short international trips, provided suit is brought in the territory. The products-completed operations hazard captures bodily injury and property damage occurring away from premises the insured owns or rents, arising out of the insured's product or completed work. Losses in this hazard erode the separate Products-Completed Operations Aggregate, not the General Aggregate — a distinction tested directly in limits questions.
Worked Example: Damages vs. Limit
A CGL has a $1,000,000 Each Occurrence limit. A single accident produces a $1,300,000 judgment for bodily injury. The insurer pays its $1,000,000 limit toward the judgment; the insured is personally responsible for the excess $300,000 unless an umbrella sits above the CGL. Defense costs the insurer incurred are paid in addition and do not reduce that $1,000,000. This shows why businesses pair a CGL with an umbrella: the per-occurrence limit caps the primary recovery, and excess judgments fall to the insured without higher layers.