CGL Coverage A: Bodily Injury and Property Damage Liability
Key Takeaways
- Coverage A pays damages for bodily injury and property damage; defense costs are paid in addition to (and do not erode) the limits.
- The occurrence form (CG 00 01) triggers on when injury occurs; the claims-made form (CG 00 02) triggers on when the claim is first made plus a retroactive date.
- Electronic data is not tangible property, so its loss is not 'property damage' under the CGL.
- The 'your work' and 'your product' exclusions mean the CGL is not a warranty/performance bond — it covers damage the product causes to others, not the defective product itself.
- An 'occurrence' requires injury that is neither expected nor intended from the insured's standpoint.
CGL Coverage A: Bodily Injury and Property Damage Liability
The Commercial General Liability (CGL) policy is built on the ISO form CG 00 01 (occurrence form) or CG 00 02 (claims-made form). The current widely tested edition is CG 00 01 04 13. The CGL covers a business's third-party liability arising from premises, operations, products, and completed operations. 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) to which the insurance applies.
The insurer's promise has two parts: the duty to pay damages and the duty to defend. The duty to defend is broader than the duty to indemnify — the insurer must defend even groundless, false, or fraudulent suits, and defense costs are paid in addition to the limits of insurance (they do not erode the limit).
The Coverage Trigger: Occurrence vs. Claims-Made
Understanding the coverage trigger is heavily tested.
- Occurrence form (CG 00 01): Responds to BI or PD that occurs during the policy period, regardless of when the claim is reported — even years later. This is the most common form.
- Claims-made form (CG 00 02): Responds only when the claim is first made during the policy period (or extended reporting period) AND the injury occurred on or after the retroactive date.
An occurrence is defined as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. The injury must be neither expected nor intended from the standpoint of the insured.
Definitions That Drive Coverage
- Bodily injury = bodily injury, sickness, or disease sustained by a person, including death resulting from any of these.
- Property damage = physical injury to tangible property, including resulting loss of use; OR loss of use of tangible property that is not physically injured. Note: electronic data is NOT tangible property under the form — a common exam trap.
- Coverage Territory generally includes the U.S., its territories, Puerto Rico, and Canada, plus worldwide coverage for products made/sold in the territory and for the activities of a person away from home for a short time on the insured's business.
Key Coverage A Exclusions
The CGL is a broad grant narrowed by exclusions. Frequently tested exclusions include:
| Exclusion | What It Removes |
|---|---|
| a. Expected/Intended Injury | Intentional acts (self-defense to protect persons/property is excepted) |
| b. Contractual Liability | Liability assumed in a contract (exception: "insured contracts") |
| c. Liquor Liability | Applies to those in the business of serving alcohol |
| d. Workers Comp / Employer's Liability | Injury to employees in the course of employment |
| g. Auto/Aircraft/Watercraft | Use of autos and most aircraft/watercraft |
| j. Damage to Property | The insured's own property and property in its care |
| k. Damage to Your Product | The insured's product itself |
| l. Damage to Your Work | The insured's completed work (subcontractor exception) |
| m. Impaired Property | Loss of use of property not physically injured |
The "your work" / "your product" exclusions reflect that the CGL is not a performance/warranty bond — it covers damage the product causes to others, not the cost to repair the faulty product itself.
CGL Coverage A Triggers, Limits, and the Insured's Duties
Coverage A of the ISO Commercial General Liability (CGL, form CG 00 01) pays sums the insured becomes legally obligated to pay as damages for bodily injury or property damage caused by an occurrence within the coverage territory during the policy period. An occurrence is an accident, including continuous or repeated exposure to substantially the same harmful conditions. Defense is provided in addition to the limits and ends when the limits are exhausted.
| Element | Coverage A requirement |
|---|---|
| Trigger | BI/PD caused by an occurrence |
| Defense | Outside limits; insurer controls and may settle |
| Territory | U.S., its territories, Canada; worldwide for products/Internet under conditions |
| Standard limit structure | Per-occurrence limit subject to aggregates |
Exam trap: The CGL covers negligent/accidental harm via "occurrence"; expected or intended injury is excluded (except reasonable force to protect persons/property). Defense costs are paid in addition to the limit under the CGL, but that duty terminates once the applicable limit is used up in judgments or settlements - a key contrast with "defense-within-limits" professional forms. The CGL responds to premises/operations and products/completed operations exposures, each with its own aggregate.
Under the ISO occurrence CGL (CG 00 01), bodily injury that occurred during the policy period but is not reported until three years after the policy expires is:
Worked Example: The "Your Work" / "Your Product" Trap
A contractor installs a defective roof for $40,000. Six months later the roof leaks, causing $15,000 in water damage to the customer's interior furnishings and the $40,000 roof must be re-done.
- Covered (Coverage A): the $15,000 water damage to other property (resulting BI/PD to third-party property).
- NOT covered: the $40,000 to repair/replace the contractor's own defective work (excluded under "damage to your work").
This illustrates why builders carry separate warranty obligations — the CGL pays for damage the faulty work causes, not the faulty work itself.
Which of the following is specifically NOT considered "property damage" under the ISO CGL form?