10.1 CGL Coverage A: Bodily Injury and Property Damage Liability

The Core Liability Grant

Coverage A - Bodily Injury and Property Damage Liability is the heart of the ISO Commercial General Liability Coverage Form (CG 00 01, current 04 13 edition). The insuring agreement says the insurer will pay those sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which the insurance applies. It is third-party coverage: it protects others the insured injures, not the insured.

The insurer also has the right and duty to defend the insured against any suit seeking those damages. Crucially, the insurer may investigate and settle any claim or suit at its discretion.

Occurrence vs. Claims-Made Trigger

The CGL is sold on two trigger forms. Know the difference cold - it is a heavily tested distinction.

The claims-made form responds only if the claim is first reported during the policy period (or ERP) and the injury happened on or after the retroactive date. An occurrence-form policy can be triggered years later as long as the harm took place during its term.

What Is an Occurrence

Coverage A applies only to BI or PD caused by an occurrence. ISO defines an occurrence as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. Because an occurrence must be accidental, injury that is expected or intended from the insured's standpoint is excluded (the policy carves back an exception for reasonable force to protect persons or property).

• Bodily injury (BI): bodily injury, sickness, or disease sustained by a person, including resulting death.
• Property damage (PD): physical injury to tangible property (including loss of use of that property), or loss of use of tangible property that is not physically injured.

The Six-Part Limit Structure

The CGL Declarations show six limits. Defense costs are paid in addition to these limits, but the duty to defend ends once the applicable aggregate is exhausted by judgments or settlements.

Note the Each Occurrence Limit is the cap per occurrence even if many people are hurt; the aggregate is the annual ceiling.

Worked Numeric: Applying the Limits

A contractor carries a CGL with $1,000,000 Each Occurrence and a $2,000,000 General Aggregate. During the policy year:

• Claim 1 (a single occurrence) results in a $900,000 judgment - the insurer pays $900,000 (under the $1M each-occurrence cap).
• Claim 2 (a separate occurrence) results in a $1,300,000 judgment - the insurer pays only $1,000,000 (the each-occurrence cap limits this single loss).

Total paid so far: $900,000 + $1,000,000 = $1,900,000, leaving only $100,000 of the $2M General Aggregate. A third unrelated $500,000 claim would be paid only up to $100,000; the insured pays the rest. Defense costs on all three are paid outside these figures until the aggregate is exhausted.

Common Coverage A Exclusions (Traps)

Candidates miss these repeatedly:

• Expected or intended injury (a) - the occurrence requirement reinforced.
• Contractual liability (b) - except liability the insured would have anyway, or an insured contract.
• Workers compensation / employer's liability (d, e) - the CGL is not WC; injuries to employees in the course of employment are excluded.
• Pollution (f) - the broad absolute pollution exclusion.
• Damage to your product / your work / impaired property (k, l, m) - the business-risk exclusions; faulty workmanship is the insured's own risk, not the carrier's.
• Auto, aircraft, watercraft (g) - covered under separate auto/aviation/marine policies.

The distinction tested: the CGL covers liability arising from the insured's product or work that injures others, but not repair or replacement of the insured's own defective product/work.

Damage to Premises Rented to You

One sub-limit deserves special attention. The CGL excludes damage to property the insured rents or occupies, except for the Damage to Premises Rented to You limit. Historically called fire legal liability, the current form extends this to several perils (fire, lightning, explosion, smoke, and water) when the insured rents premises for seven or fewer consecutive days, and to fire for longer-term rentals.

The default limit is $300,000, shown separately in the Declarations. Example: a tenant's negligence causes a kitchen fire damaging the landlord's building. The general property exclusion would bar coverage, but the Damage to Premises Rented to You grant restores it up to $300,000 - a frequently tested carve-back.