CGL Coverage A: Bodily Injury and Property Damage Liability

Coverage A: The Heart of the CGL

The Commercial General Liability (CGL) Coverage Form is the most heavily tested commercial casualty form on the national exam. The ISO standard form is the Commercial General Liability Coverage Form CG 00 01, with the current widely tested edition being CG 00 01 04 13. Coverage A is the insuring agreement that pays on behalf of the insured for bodily injury (BI) and property damage (PD) the insured becomes legally obligated to pay as damages, plus the duty to defend.

Memorize the order of the three liability coverages: Coverage A = BI and PD, Coverage B = Personal and Advertising Injury, Coverage C = Medical Payments. Exam questions routinely scramble these letters to catch unprepared candidates.

What Coverage A Insures

Coverage A responds when three conditions are all met:

• The BI or PD is caused by an occurrence (defined as an accident, including continuous or repeated exposure to substantially the same harmful conditions).
• The occurrence takes place in the coverage territory.
• The injury or damage happens during the policy period.

Bodily injury means bodily injury, sickness, or disease sustained by a person, including death resulting from any of these at any time. Property damage 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. The exam loves the phrase "loss of use" — it is property damage even when nothing is physically broken.

Occurrence vs. Claims-Made Trigger

The standard CG 00 01 is written on an occurrence trigger: coverage applies if the injury or damage happens during the policy period, no matter when the claim is later reported. ISO also publishes a Claims-Made Coverage Form CG 00 02, which responds only when the claim is first made during the policy period (or the extended reporting period) and after the retroactive date.

Key claims-made concepts:

• Retroactive date — the earliest date an occurrence can take place and still be covered. Injury before this date is excluded.
• Extended Reporting Periods (ERPs) — the Basic ERP (automatic, typically 60 days to report and a 5-year tail for occurrences reported during it) and the Supplemental ERP (purchased by endorsement, unlimited duration).

The CGL Limits Structure

The CGL uses a layered set of six limits. Understanding how they interact is essential for numeric questions.

The Each Occurrence Limit is the most a policy pays for any single occurrence; it is capped above by the aggregates.

Worked Numeric: How Aggregates Erode

Assume limits: Each Occurrence $1,000,000 / General Aggregate $2,000,000 / Products-Completed Ops Aggregate $2,000,000. During the year three premises-operations occurrences settle: $800,000, $1,200,000 (capped at $1,000,000), and $600,000.

• Occurrence 1 pays $800,000 (under the $1M each-occurrence cap).
• Occurrence 2 is capped at $1,000,000 even though the loss was $1.2M.
• Running General Aggregate used = $800,000 + $1,000,000 = $1,800,000.
• Occurrence 3 needs $600,000 but only $200,000 of General Aggregate remains, so it pays $200,000.

The insured absorbs $400,000 on occurrence 3. Trap: products/completed-operations losses do NOT touch the General Aggregate — they erode the separate Products-Completed Operations Aggregate.

The Duty to Defend

The insurer's duty to defend is broader than its duty to indemnify. The CGL states the insurer will defend any suit seeking damages to which the insurance applies, even if the allegations are groundless, false, or fraudulent. The duty to defend ends once the insurer has used up the applicable limit paying judgments or settlements. Because defense costs are paid as Supplementary Payments in addition to the limit (covered in Section 10.3), a heavy defense does not erode the money available to pay a claimant on the standard occurrence form.

Coverage A Exclusions to Memorize

The exam tests these recurring Coverage A exclusions:

• Expected or intended injury — intentional acts by the insured (self-defense exception for BI).
• Contractual liability — except liability assumed in an insured contract (the named exception).
• Workers' compensation / employer's liability — covered elsewhere, excluded here.
• Pollution — broad absolute pollution exclusion with limited exceptions.
• Auto, aircraft, watercraft — covered by other forms (with narrow exceptions).
• Damage to your product, your work, and impaired property — the "business risk" exclusions; the CGL is not a performance warranty.

Trap: The CGL covers BI/PD that the insured's faulty work causes to OTHER property, but not the cost to repair the insured's own defective work.