10.1 CGL Coverage A: Bodily Injury and Property Damage Liability
Key Takeaways
- Coverage A on ISO CG 00 01 pays sums the insured is legally obligated to pay as damages for bodily injury or property damage caused by an occurrence during the policy period in the coverage territory
- The duty to defend is broader than the duty to indemnify — the insurer must defend if any allegation could fall within coverage, and defense costs are paid in addition to limits
- An occurrence is an accident, including continuous or repeated exposure to substantially the same harmful conditions; the occurrence form triggers on the date of injury or damage, not the date the claim is reported
- Coverage A is third-party liability — it excludes damage to the insured's own product or completed work, property in the insured's care custody or control, and most pollution and auto-related losses
- Each Occurrence and General Aggregate limits interact: a claim within the per-occurrence cap can still be unpaid if the General Aggregate is exhausted
The Commercial General Liability (CGL) policy is the workhorse of business casualty insurance — and Coverage A: Bodily Injury and Property Damage Liability is its heart. On the Nevada Property and Casualty combo exam (141 scored questions, scaled passing score of 70), national Casualty Terms and Policy Provisions items repeatedly test whether you can read a short fact pattern, identify an occurrence, and decide if Coverage A responds before you ever reach the exclusion chapter. This section builds that foundation using the ISO CG 00 01 occurrence form (April 2013 edition is the reference most licensing outlines cite), contrasted briefly with the claims-made CG 00 02 form you will study in depth later.
How the CGL Policy Is Built
A complete CGL policy is not just one form. It combines:
| Component | Typical ISO Form | Role |
|---|---|---|
| Declarations | — | Named insured, limits, policy period, premium |
| Common Policy Conditions | IL 00 17 | Cancellation, changes, examination of books, fraud |
| CGL Coverage Form | CG 00 01 (occurrence) or CG 00 02 (claims-made) | Coverage A, B, C insuring agreements |
| Endorsements | CG 20 xx, CG 25 xx, etc. | Additional insureds, aggregate splits, modifications |
Coverage A sits in Section I — Coverage, alongside Coverage B (Personal and Advertising Injury) and Coverage C (Medical Payments). Coverage A is the only section that pays damages because of bodily injury or property damage — the physical-harm lane of the CGL.
The Coverage A Insuring Agreement
Under Coverage A, the insurer agrees to two distinct obligations:
- Indemnity — pay sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which the insurance applies.
- Defense — have the right and duty to defend the insured against any suit seeking those damages, even if the allegations are groundless, false, or fraudulent.
Exam trap: The duty to defend is broader than the duty to indemnify. If any allegation in the complaint could fall within coverage, the insurer must defend. The duty to defend ends when the applicable limit is exhausted by payment of judgments or settlements — not when defense costs alone reach the limit, because defense is a Supplementary Payment paid in addition to the limits (covered in section 10.3).
Key Definitions
| Term | ISO Meaning | Exam Note |
|---|---|---|
| Bodily injury | Bodily injury, sickness, disease, including death at any time | Includes occupational disease from repeated exposure |
| Property damage | Physical injury to tangible property, including loss of use, or loss of use of tangible property not physically injured | Pure economic loss without physical harm is usually not PD |
| Occurrence | An accident, including continuous or repeated exposure to substantially the same harmful conditions | Not every injury is an occurrence — expected acts may fail |
| Damages | Money the insured is legally obligated to pay | Does not include the insured's own loss of earnings or goodwill |
The Occurrence Trigger and Coverage Territory
On CG 00 01, Coverage A applies only if:
- Bodily injury or property damage is caused by an occurrence;
- The occurrence takes place in the coverage territory;
- The bodily injury or property damage occurs during the policy period.
The occurrence trigger means the date of injury or damage controls which policy responds — not the date the claim is reported or suit is filed. A customer injured in December 2025 and who sues in 2027 still triggers the 2025 policy if that was the policy in force when the injury occurred.
The coverage territory is broader than many candidates expect:
- United States (including territories and possessions), Puerto Rico, and Canada;
- International waters or airspace while traveling between those places;
- Anywhere in the world for products-completed operations hazard if the suit is brought in the coverage territory;
- Limited worldwide reach for certain internet activities and short foreign business trips.
Nevada scenario: A Henderson manufacturer ships exercise equipment nationwide. A buyer in Florida is injured when a weld fails. Suit is filed in Clark County, Nevada. Coverage A can respond under the products-completed operations hazard even though the injury happened outside Nevada, because suit is brought in the coverage territory.
Major Coverage A Exclusions (Preview)
Coverage A is broad third-party liability, but the exam loves predictable exclusions:
| Exclusion Category | What It Bars | Classic Trap |
|---|---|---|
| Expected or intended | Injury the insured expected or intended | Intentional assault excluded; accidental shove may be covered |
| Contractual liability | Liability assumed by contract | Exception: insured contracts |
| Workers compensation / employers liability | Employee injury claims | Belongs on the WC policy |
| Pollution | Most pollution-related BI/PD | Absolute pollution exclusion is sweeping |
| Auto, aircraft, watercraft | Vehicle-related liability | Covered by commercial auto or specialty forms |
| Damage to your product | The named insured's own defective product | Business-risk exclusion |
| Damage to your work | Faulty workmanship on completed work | Contractor must stand behind own work |
| Damage to property in your care, custody, or control | Customer property you are repairing | Exception: fire damage to rented premises (separate sublimit) |
| Recall / sistership | Costs to withdraw products from market | Economic loss, not third-party BI/PD |
Quick Answer: Coverage A never pays to fix the insured's own defective product or botched workmanship — those are business-risk exclusions testing whether you understand third-party versus first-party loss.
Limits and Worked Arithmetic
Although limit mechanics are developed further in the CGL limits chapter, Coverage A payments are capped by stacked limits on the declarations page:
| Limit | What It Caps |
|---|---|
| Each Occurrence | Maximum for BI + PD from one occurrence (combined single limit) |
| General Aggregate | Maximum total for Coverage A + B + C (except products-completed ops) in the policy year |
| Products-Completed Operations Aggregate | Separate annual cap for product failure and completed-work claims |
Worked example: A Las Vegas general contractor carries $1,000,000 Each Occurrence / $2,000,000 General Aggregate. Three separate covered BI claims during one policy year total $700,000, $900,000, and $800,000. Each fits within the $1M per-occurrence limit, but combined payments of $2,400,000 exceed the $2M General Aggregate. The insurer pays only $2,000,000 total; the contractor absorbs $400,000 once the aggregate is exhausted — even though the third claim alone is under the per-occurrence cap.
Second trap: Defense costs do not reduce these limits on the standard CGL. A $1M judgment plus $80,000 in defense costs means the insurer pays $1,080,000 from its pocket, with only the $1M damages eroding the occurrence limit.
Occurrence vs. Claims-Made (Contrast Only)
CG 00 02 (claims-made) triggers when the claim is first made during the policy period and after the retroactive date — not when injury occurs. Switching forms without buying an Extended Reporting Period (tail) creates a dangerous gap. The licensing exam usually signals claims-made problems with words like "retroactive date," "first made," or "ERP." When you see injury dates and reporting dates in different years, label the form type before selecting an answer.
Putting It Together on Exam Day
When a fact pattern describes a third-party slip-and-fall, a defective product injury, or fire damage to a neighbor's building from the insured's operations, walk through this checklist:
- Is there bodily injury or property damage?
- Was it caused by an occurrence during the policy period?
- Did it happen in the coverage territory?
- Does a major exclusion remove coverage (expected injury, own product/work, pollution, auto)?
- Do limits cap payment (Each Occurrence, then General Aggregate)?
Nevada producer note: Your commercial clients on the Strip, in warehouse districts, and at rural construction sites all rely on Coverage A for visitor injuries and off-premises operations liability. Understanding the occurrence trigger and the business-risk exclusions helps you explain why a CGL does not replace a commercial auto policy, a pollution policy, or the contractor's warranty on completed work.
Memory anchors: legally obligated to pay as damages · occurrence during policy period · defend broader than indemnify · defense outside limits · aggregate can cap before per-occurrence limit is reached.
Under the ISO CGL occurrence form (CG 00 01), a customer is injured on the insured's premises in November 2025 but does not file suit until March 2027. Which policy period most likely triggers Coverage A?
A contractor's employee accidentally drops a tool from scaffolding, injuring a pedestrian below. The contractor has $1,000,000 Each Occurrence and $2,000,000 General Aggregate limits. Prior covered claims this year have already paid $1,850,000. A new covered judgment is $300,000. How much does the insurer pay?
Which loss is most likely excluded under Coverage A as a business-risk exclusion?