CGL Coverage A: Bodily Injury and Property Damage Liability

The CGL Form and Coverage A

The Commercial General Liability (CGL) policy is built on standardized Insurance Services Office (ISO) forms. The most-tested edition family is form CG 00 01, the Commercial General Liability Coverage Form. Coverage A is the heart of the policy: it pays sums the insured becomes legally obligated to pay as damages because of bodily injury (BI) or property damage (PD).

The insurer also has a duty to defend any suit seeking those damages, even if the suit is groundless, false, or fraudulent. This duty is broader than the duty to pay and ends once the insurer has used up the applicable limit paying judgments or settlements.

Trigger: the occurrence basis

Coverage A is written on an occurrence trigger. It responds when BI or PD is caused by an occurrence - defined as an accident, including continuous or repeated exposure to substantially the same harmful conditions - that takes place in the coverage territory during the policy period.

• Bodily injury = bodily injury, sickness, or disease, including death resulting at any time.
• Property damage = physical injury to tangible property (plus resulting loss of use), or loss of use of tangible property that is not physically injured.

Exam trap: because the trigger is occurrence, the date of the accident matters, not the date the claim is reported. A claim reported years later is still covered if the occurrence fell inside that year's policy period. Compare this with claims-made forms used for many professional liability lines.

The two limits that bound Coverage A

Coverage A is capped by two limits shown on the declarations:

Worked example

A contractor has a $1,000,000 Each Occurrence limit and a $2,000,000 General Aggregate. A single warehouse collapse injures three workers, generating claims of $400,000, $500,000, and $350,000 = $1,250,000. Because all three arise from one occurrence, the per-occurrence limit of $1,000,000 applies; the insurer pays $1,000,000 and the insured absorbs $250,000. The aggregate is reduced by the $1,000,000 paid, leaving $1,000,000 of aggregate for the rest of the year.

Damage to your work versus damage to others

The CGL is not a warranty of the insured's own workmanship. Exclusions j, k, l, and m remove damage to property the insured owns, rents, or occupies, to your product, to your work, and to impaired property that is not physically injured. The "your work" exclusion contains an important exception: it does not apply to completed work performed by a subcontractor. So a general contractor whose subcontractor's faulty plumbing floods a finished building can have coverage, even though the GC's own faulty work would be excluded. This subcontractor exception is a recurring exam favorite.

Premises, operations, and products-completed operations

Coverage A bundles two exposures that share the Each Occurrence limit but have different aggregates. Premises and operations liability covers injury arising from the insured's ongoing business and physical location - a customer hurt in the store today. Products-completed operations covers injury that happens away from the premises after the insured's product has been sold or work finished - a deck that collapses a year after a contractor builds it. Products-completed operations claims draw against the separate Products-Completed Operations Aggregate, not the General Aggregate, which is why the declarations show two aggregates.

Worked aggregate-exhaustion example

A manufacturer carries a $1,000,000 Each Occurrence limit, a $2,000,000 General Aggregate, and a $2,000,000 Products-Completed Operations Aggregate. During the year it pays $800,000 for a slip-and-fall (premises/ops, hits the General Aggregate) and three product-defect claims of $1,000,000, $700,000, and $600,000. The product claims total $2,300,000 but draw only on the $2,000,000 products aggregate, so the insurer pays $2,000,000 and the insured absorbs $300,000. Crucially, the slip-and-fall did not reduce the products aggregate - the two pools are independent, a distinction the exam tests directly.

Coverage A definitions that decide claims

Two definitions anchor Coverage A questions. Bodily injury means bodily injury, sickness, or disease, including death that results at any time - so a fatality is paid as a bodily-injury claim, not a separate category, and purely emotional distress with no physical manifestation generally is not bodily injury. Property damage has two prongs: physical injury to tangible property (with resulting loss of use) and loss of use of tangible property that is not physically injured - and electronic data is not tangible property without an endorsement.

Pairing these definitions with the occurrence trigger (date of injury controls, not date of claim) lets a candidate route most Coverage A scenarios correctly.

Key Coverage A exclusions to memorize

• Expected or intended injury (intentional acts), with an exception for reasonable use of force to protect persons or property.
• Contractual liability, except liability the insured would have anyway and liability assumed in an insured contract.
• Workers' compensation and employer's liability (covered elsewhere).
• Pollution, aircraft/auto/watercraft, liquor liability (for those in the business), damage to your own product/work, and war.

Trap: Coverage A excludes damage to the insured's own product and own completed work, because the CGL is not a performance warranty. Faulty workmanship that damages a third party's property may still be covered.