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

The CGL Insuring Agreements

The ISO Commercial General Liability form (CG 00 01, occurrence version) is the backbone of business liability and a heavy exam topic. It contains three insuring agreements, two of which dominate testing.

An occurrence is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Because it must be an accident, expected or intended injury is excluded from Coverage A.

Bodily Injury and Property Damage Defined

Bodily Injury (BI)

The ISO definition: "bodily injury, sickness, or disease sustained by a person, including death that results." Key points:

• Covers physical injury and its consequences (including resulting death).
• Pure emotional/mental distress with no physical injury generally is not BI under the standard form — a common exam trap.

Property Damage (PD)

Two prongs:

1. Physical injury to tangible property, including resulting loss of use of that property; and
2. Loss of use of tangible property that is not physically injured.

Trap: PD requires tangible property. Pure economic loss or damage to intangible property (data alone, goodwill) is typically not PD under the unendorsed CGL. The second prong is why a contractor who blocks access to a store with no physical harm can still cause covered PD — the store lost the use of its premises.

Personal and Advertising Injury (Coverage B)

Coverage B is not triggered by an occurrence; it responds to a defined list of offenses. Memorize the list — the exam tests whether a fact pattern fits it:

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

Trap: Patent and trademark infringement are excluded from advertising injury — only copyright, trade dress, and slogan are covered. Candidates routinely pick the wrong intellectual-property item.

CGL Limits Structure

The declarations show several limits that interact. A typical small-business CGL is illustrated below.

Worked example: With a $1M each-occurrence and $2M general aggregate, three separate occurrences of $800,000 each total $2,400,000. Each is within the $1M occurrence cap, but the general aggregate stops payment at $2,000,000 — the third claim is only partly paid. Note that products-completed operations losses draw on their own separate $2M aggregate, not the general aggregate.

Defining Occurrence, Property Damage, and Loss of Use

Precise definitions drive Coverage A questions. An occurrence is an accident, including continuous or repeated exposure to substantially the same harmful conditions, which means a gradual process (leaking solvent over months) can still be one occurrence. Property damage means physical injury to tangible property, including resulting loss of use, and loss of use of tangible property that is not physically injured.

The "loss of use" branch is heavily tested: if a contractor's error shuts down a client's plant without physically damaging it, that lost use is property damage even with no broken equipment. Bodily injury means physical injury, sickness, or disease, including death resulting from it.

The Five Personal-and-Advertising-Injury Offenses

Coverage B insures personal and advertising injury arising from a closed list of offenses: false arrest or imprisonment; malicious prosecution; wrongful eviction or invasion of a right of private occupancy; oral or written publication that slanders or libels; publication that violates a person's right of privacy; and use of another's advertising idea or infringement of copyright, trade dress, or slogan in your advertisement. Unlike Coverage A, these offenses are intentional acts that are nonetheless covered because they are business torts, not bodily injury.

The exam tests recognizing which alleged wrong falls under Coverage A (BI/PD), Coverage B (offenses), or neither.

Coverage C Medical Payments and the Limit Hierarchy

Coverage C (Medical Payments) under the CGL pays reasonable medical expenses regardless of fault for bodily injury to a non-insured on the insured's premises or arising from operations, usually if the expense is incurred within one year of the accident — a goodwill coverage that settles minor injuries without litigation. It does not apply to injuries to insureds, employees, or anyone for whom benefits are payable under workers compensation.

The CGL limit hierarchy ranks the per-occurrence limit (caps any single occurrence for A and C combined), the general aggregate (caps total A, B, and C payments for the term), and the products-completed-operations aggregate (a separate cap for that hazard), with personal-and-advertising-injury and damage-to-premises-rented limits applying their own sublimits.