8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury

The CGL's Three Insuring Agreements

The ISO Commercial General Liability Coverage Form (CG 00 01) contains three insuring agreements, and the exam expects you to match a fact pattern to the correct one:

Coverages A and B require the insured to be legally liable; Coverage C pays small medical bills regardless of fault as a goodwill, claim-avoiding gesture. The definitions of the triggering injuries are tested almost verbatim, so commit them to memory.

Coverage A — Bodily Injury and Property Damage

Bodily injury (BI) means physical injury, sickness, or disease sustained by a person, including death resulting from any of these. The key word is physical. Pure emotional distress or mental anguish without physical harm is generally not BI under the standard form (some states and endorsements broaden this).

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. Two consequences flow from the word tangible: data/electronic information is expressly not tangible property, and pure economic loss (lost profit with no physical damage) is not PD.

Coverage B — Personal and Advertising Injury

Coverage B is the important exception to the general rule that liability policies exclude intentional acts. It covers a closed list of named, mostly intentional offenses — if the act is not on the list, Coverage B does not respond. The ISO offenses are:

• False arrest, detention, or imprisonment
• Malicious prosecution
• Wrongful eviction, wrongful entry, or invasion of the right of private occupancy
• Oral or written publication of material that slanders or libels a person or organization (defamation)
• Oral or written publication of material that violates a person's right of privacy
• The use of another's advertising idea in your advertisement
• Infringing upon another's copyright, trade dress, or slogan in your advertisement

Exam alert: Coverage B is a named-offense form. Patent and trademark infringement are excluded (only copyright, trade dress, and slogan in your advertisement are covered). Notice these are intentional torts — Coverage B is the deliberate carve-back that makes the CGL respond to defamation, false arrest, and similar offenses despite the policy's general expected-or-intended exclusion.

Coverage C — Medical Payments (No-Fault)

Coverage C pays reasonable medical expenses for bodily injury caused by an accident on the insured's premises or arising from the insured's operations, regardless of the insured's fault. It is a small goodwill limit (often $5,000 to $10,000 per person) designed to settle minor injuries quickly and prevent them from escalating into Coverage A lawsuits. It does not apply to the insured's own employees (workers compensation responds) or to the insured themselves.

How the Limits Govern What Gets Paid

The CGL has a stack of limits, and their interaction is a favorite exam topic:

Critical trap — aggregate erosion: The General Aggregate is the total the policy will pay in a year. As claims are paid, it erodes. Once the aggregate is nearly exhausted, less than the per-occurrence limit may remain for the next loss. Example: $1M each-occurrence / $2M aggregate; after $1.8M in prior payments, only $200,000 is left for the next occurrence even though its own limit is $1M. The products-completed operations aggregate is separate, so eroding the general aggregate does not touch it, and vice versa.

Matching the Fact Pattern to the Right Coverage

The fastest way to handle CGL questions is to read the injury and immediately classify it. A slip-and-fall in the store, a product that injures a user, a contractor whose ladder cracks a customer's windshield — these are Coverage A (BI or PD). A wrongful eviction, a defamatory social-media post, a false-arrest detention by a store guard, or using a rival's slogan in an ad — these are Coverage B named offenses. A minor cut to a visitor on the premises that the store offers to treat without admitting fault — that is Coverage C medical payments.

Watch the definitional traps. Bodily injury demands a physical component, so a stand-alone claim for emotional distress usually fails Coverage A. Property damage demands tangible property, so corrupted data, lost profits, and a defective product's own repair cost (the "your work"/"your product" exclusions) are not covered PD. Coverage B is a closed list, so patent and trademark infringement are excluded even though copyright, trade dress, and slogan infringement in your advertisement are included.

Limits in Action

The CGL limits stack in a specific order. The Each-Occurrence limit caps a single loss; the General Aggregate caps the year for most claims (including Coverage B and C); the Products-Completed Operations Aggregate is a separate annual cap for products and completed-work claims; and the Personal & Advertising Injury limit caps Coverage B per person or organization.

Because the general aggregate erodes as claims are paid, the producer must monitor it: a business with several mid-year claims may find that less than the per-occurrence limit remains for the next loss, which is the classic argument for buying a commercial umbrella to sit above an eroding primary aggregate. Remember the one-line decision rule: classify the injury (A, B, or C), confirm the definition is met, then test it against the applicable limit.