CGL Coverage A: Bodily Injury and Property Damage Liability

CGL Coverage A: Bodily Injury and Property Damage Liability

The Commercial General Liability (CGL) policy is the foundation of business liability insurance and a heavily tested topic on the national portion of the P&C exam. The standard form is ISO CG 00 01 (current editions you should recognize include CG 00 01 04 13 and CG 00 01 12 07). The CGL combines three insuring agreements: Coverage A (Bodily Injury and Property Damage Liability), Coverage B (Personal and Advertising Injury Liability), and Coverage C (Medical Payments).

Coverage A is the core. It promises to pay sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which the insurance applies, and includes the insurer's duty to defend.

What Triggers Coverage A

Three conditions must all be met for Coverage A to respond:

• The bodily injury or property damage is caused by an occurrence (an accident, including continuous or repeated exposure to substantially the same harmful conditions).
• The occurrence takes place in the coverage territory (the U.S., its territories, Canada, and certain international situations such as products made/sold in the territory).
• The injury or damage occurs during the policy period.

The CGL is written on an occurrence trigger, meaning the policy that was in force when the injury happened responds, even if the claim is reported years later. Contrast this with claims-made forms, which respond based on when the claim is first made and use a retroactive date.

Key Definitions

Bodily injury (BI) means bodily injury, sickness, or disease sustained by a person, including death resulting from any of these at any time. Property damage (PD) means physical injury to tangible property (including loss of use of that property) or loss of use of tangible property that is not physically injured. Note that the standard CGL states electronic data is not tangible property.

A frequent exam trap: pure economic loss or loss of use without a triggering occurrence may not qualify, and intangible items (data, money) generally fall outside the PD definition.

The CGL Limits Structure

The CGL declarations show a layered limit structure. Memorize how these interact:

The General Aggregate caps almost everything except products-completed operations, which has its own separate aggregate.

Worked Numeric: How Aggregates Erode

Assume: Each Occurrence $1,000,000; General Aggregate $2,000,000; Products-Completed Operations Aggregate $2,000,000.

During the year a premises slip-and-fall (a non-products claim) pays $1,000,000, exhausting one full occurrence and reducing the General Aggregate to $1,000,000 remaining. A second non-products claim pays $800,000, leaving $200,000 in the General Aggregate. A products claim of $900,000 is not charged against the General Aggregate; it draws on the separate Products-Completed Operations Aggregate, leaving $1,100,000 there. This dual-aggregate design is a favorite exam point: products and completed operations losses do not erode the general aggregate.

Major Coverage A Exclusions (High-Yield)

Know these by name:

• Expected or intended injury (intentional acts) - though reasonable force to protect persons/property is preserved.
• Contractual liability - except liability assumed in an insured contract.
• Liquor liability - applies only to those in the business of serving/selling alcohol.
• Workers' compensation and employer's liability - bodily injury to employees in the course of employment.
• Pollution - the absolute pollution exclusion.
• Auto, aircraft, watercraft - covered under separate policies.
• Damage to your product / your work / impaired property - the "business risk" exclusions; the CGL is not a warranty on the insured's own work.
• Damage to property in your care, custody, or control.

Coverage A - The Core Insuring Agreement

CGL Coverage A pays sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which the insurance applies, and provides the duty to defend. Two triggers must be met: the BI/PD must be caused by an "occurrence" (an accident, including continuous or repeated exposure to substantially the same harmful conditions) and must happen in the "coverage territory" during the policy period.

Occurrence and the Duty to Defend

The word "occurrence" is exam-critical: it excludes expected or intended harm, so intentional acts are not "accidents." The duty to defend is broader than the duty to indemnify - the insurer must defend any suit seeking damages potentially within coverage, even groundless or fraudulent ones, and defense costs are paid in addition to the limits. The duty to defend ends once the applicable limit is exhausted by judgments or settlements.

Products and Completed Operations

Coverage A automatically includes the products-completed-operations hazard - bodily injury or property damage occurring away from premises and arising out of the insured's product (after it leaves the insured's possession) or completed work (after operations are finished). This hazard has its own aggregate limit, separate from the general aggregate, and is one of the most heavily tested CGL structural features.

The Major Coverage A Exclusions

The "your product / your work / impaired property" exclusions (the business-risk exclusions) are tested constantly: the CGL pays for damage the product causes to others, not the cost to repair or replace the insured's own defective work or product, which is a business risk, not an insurable fortuity.