3.1 General Liability Insurance

Commercial General Liability (CGL) insurance protects businesses against claims of bodily injury, property damage, and personal injury.

CGL Coverage Parts

Coverage A: Bodily Injury and Property Damage Liability

Bodily Injury Coverage:

• Medical expenses for injured third parties
• Lost wages and disability
• Pain and suffering damages
• Death benefits
• Defense costs

Property Damage Coverage:

• Damage to others' property
• Loss of use of damaged property
• Defense costs

Occurrence Form:

• Covers claims arising from incidents during policy period
• Claims can be filed years after occurrence
• Most common CGL form in Massachusetts

Coverage B: Personal and Advertising Injury

Personal Injury:

• False arrest, detention, or imprisonment
• Malicious prosecution
• Wrongful eviction
• Slander or libel
• Invasion of privacy

Advertising Injury:

• Copyright infringement in advertisements
• Misappropriation of advertising ideas
• Slander or libel in advertisements

Exam Tip: Personal and Advertising Injury covers non-physical injuries like slander and libel. This is separate from bodily injury coverage.

Coverage C: Medical Payments

Features:

• Pays medical expenses for injured persons (no fault required)
• Goodwill coverage to prevent lawsuits
• Typically $5,000 to $10,000 per person
• No deductible
• Excludes insured and employees (covered by workers' comp)

CGL Policy Limits

Split Limits

Standard CGL policies have split limits:

How Aggregates Work

Example:

• General Aggregate: $2,000,000
• Per Occurrence: $1,000,000

If three separate $1 million claims occur:

• First claim: Pays $1 million
• Second claim: Pays $1 million (aggregate reached)
• Third claim: No coverage (aggregate exhausted)

Exam Tip: The general aggregate is the maximum the policy pays for all covered claims except products/completed operations during the policy period.

Products and Completed Operations

Products Liability

Covers:

• Injury or damage from products manufactured or sold
• Product defects (design, manufacturing, marketing)
• Failure to warn of dangers
• Claims arising after product leaves insured's control

Completed Operations Liability

Covers:

• Injury or damage from completed work
• Construction defects
• Installation errors
• Work completed and turned over to customer

Separate Aggregate

Products/Completed Operations has a separate $2 million aggregate:

• Does not erode general aggregate
• Critical for contractors and manufacturers
• Coverage extends beyond policy expiration for past work

CGL Exclusions

Expected or Intended Injury

Excluded:

• Intentional acts by insured
• Expected damage or injury
• Criminal acts

Contractual Liability (Partial)

Excluded:

• Liability assumed under contract (except insured contracts)

Covered "Insured Contracts":

• Lease agreements
• Railroad sidetrack agreements
• Elevator maintenance agreements
• Indemnification of municipality

Employer's Liability

Excluded:

• Injury to employees (covered by workers' compensation)
• Lawsuits by employees for work-related injuries

Pollution

Excluded:

• Pollution damage (except hostile fire exception)
• Gradual environmental contamination
• Requires separate pollution liability coverage

Professional Liability

Excluded:

• Errors and omissions in professional services
• Requires separate professional liability policy

Aircraft, Auto, and Watercraft

Excluded:

• Motor vehicle liability (requires auto policy)
• Aircraft liability
• Large watercraft (over 26 feet)

Exam Tip: CGL excludes auto, professional liability, pollution, and intentional acts. These require separate coverage.

Personal Liability Coverage (Homeowners)

Coverage E: Personal Liability

Included in homeowners policies (HO-2, HO-3, HO-4, HO-6):

Coverage:

• Bodily injury to others
• Property damage to others
• Legal defense costs
• No fault required (negligence-based)

Typical Limits:

• $100,000 to $500,000
• Higher limits available
• Consider umbrella for additional protection

Coverage F: Medical Payments to Others

Features:

• $1,000 to $5,000 per person typical
• Pays medical expenses without fault determination
• Covers injuries on insured premises
• No deductible
• Excludes residents and regular occupants

Umbrella and Excess Liability

Personal Umbrella Policy

Features:

• Provides additional liability coverage above underlying policies
• Typical limits: $1 million to $5 million
• Covers gaps in underlying policies
• Requires minimum underlying limits

Underlying Requirements (typical):

• Auto liability: $250,000/$500,000
• Homeowners liability: $300,000
• Boat liability: $300,000

Commercial Umbrella Policy

Features:

• Provides excess liability over CGL, auto, employer's liability
• Typical limits: $1 million to $25 million+
• May provide drop-down coverage for gaps
• Critical for Massachusetts businesses with significant exposure