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

The Three CGL Coverages

The ISO Commercial General Liability form (CG 00 01) organizes the casualty exposure into three insuring agreements:

Coverage C trap: Medical Payments is not liability coverage — it pays a third party's medical bills with no requirement that the insured be at fault, as a goodwill/early-settlement device. It does not apply to the insured or employees.

Bodily Injury (BI)

Bodily injury is defined as physical injury, sickness, or disease, including death resulting from any of these. The key word is physical.

• Covered: broken bones, illness from contaminated food, death.
• Disputed: pure emotional distress or mental anguish with no accompanying physical harm — many CGL forms require an underlying physical injury before mental anguish is covered.

Property Damage (PD)

Property damage 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 — e.g., a blocked driveway prevents a business from operating even though nothing is broken.

Trap: Tangible is the operative word. Damage to purely intangible property (data, electronic information in many editions) is excluded from PD — ISO has specifically clarified that electronic data is not tangible property.

The Four Categories of Covered Injury

Liability policies divide covered harm into distinct categories, each defined precisely:

In the CGL, Personal and Advertising Injury are combined under Coverage B, separate from BI/PD under Coverage A.

Exam trap: Property damage includes "loss of use" of tangible property that was not physically harmed - a covered category candidates often miss. Personal/advertising injury is NOT bodily injury; it covers reputational and rights-based offenses and is written under Coverage B with its own limit. Mental anguish may be treated as BI only if it arises from a physical injury, depending on policy wording and state law.

Personal & Advertising Injury (Coverage B)

Coverage B responds to a closed list of named offenses, not general negligence. Memorize the list:

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

Trap: Many Coverage B offenses are intentional acts — a carve-back from the usual intentional-injury exclusion. But Coverage B does not cover patent or trademark infringement, breach of contract, or knowingly false statements.

The CGL Limit Structure (Worked)

The CGL uses six split limits on the declarations. A typical schedule:

How they cap payment: The Each Occurrence limit caps any single loss (BI + PD combined). The General Aggregate caps the total of all Coverage A (non-products), Coverage B, and Coverage C payments for the policy year. Products-completed operations losses erode their own separate aggregate, not the general aggregate.

Worked numeric

An insured has three covered occurrence claims in one year of $800,000, $700,000, and $900,000 (each below the $1M Each-Occurrence limit, so each is paid in full = $2,400,000 demanded). But the $2,000,000 General Aggregate caps total payments — the insurer pays the first $2,000,000 and the insured absorbs the remaining $400,000. Once the aggregate is exhausted, coverage for further claims that year is gone until renewal.

Medical Payments and the Damage-to-Premises Sublimit

Two CGL limits behave differently from the main liability limits and are favorite exam distractors.

• Medical Expense (Coverage C): pays a third party's reasonable medical costs incurred within three years of the accident, regardless of fault, capped per person (e.g., $10,000). It encourages early settlement and reduces larger liability claims. It does not apply to the insured, employees injured in the course of employment, or tenants.
• Damage to Premises Rented to You: a sublimit (e.g., $300,000) covering fire damage (and, in current editions, certain other perils) to premises the insured rents short-term. It carves back the 'damage to property in your care' exclusion for rented premises only.

Aggregate reinstatement trap: Aggregates are annual — they do not reinstate after each claim. Once exhausted, the insured has no coverage for further losses that year. Buying higher limits or a commercial umbrella restores protection above the depleted CGL.