8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury
Key Takeaways
- Coverage A pays bodily injury and property damage caused by an occurrence; Coverage B pays listed personal and advertising injury offenses; Coverage C pays no-fault medical expenses
- Property damage includes loss of use of undamaged tangible property, but electronic data is not tangible property under the standard CGL
- Personal and advertising injury covers libel, slander, false arrest, privacy violations, and limited advertising IP — not patent or trademark infringement
- CGL limits stack: each occurrence, general aggregate, separate products-completed operations aggregate, and personal and advertising injury limit
- Defense costs under Supplementary Payments are paid in addition to limits for Coverages A and B until limits are exhausted
The Commercial General Liability policy does not pay for "bad luck" — it pays for defined injuries and offenses listed in the form. Section 8.4 is where negligence, triggers, and policy language meet: you classify the harm, match it to Coverage A, B, or C, then apply the right limit stack. National casualty items on the Nevada Pearson VUE exam frequently describe a retail or contractor loss in Clark or Washoe County and ask which coverage part responds and whether aggregates cap payment.
Three Coverages, Three Triggers
| Coverage | What It Pays | Trigger |
|---|---|---|
| A — Bodily Injury & Property Damage | BI and PD | Occurrence (accident, including continuous exposure to same harmful conditions) |
| B — Personal & Advertising Injury | Listed offenses | Offense committed (not an occurrence) |
| C — Medical Payments | Medical expenses of injured third parties | Injury on premises or from operations — no fault required |
Defined Terms (Memorize)
Bodily injury — bodily injury, sickness, disease, including death that results.
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.
Critical traps:
- Electronic data is not tangible property under the standard CGL — corrupted servers or deleted files are generally not PD under Coverage A.
- Loss of use of undamaged property still qualifies as property damage (a factory shut down because a supplier's negligent delivery blocked access).
- Pure economic loss with no BI or PD is usually not Coverage A.
Personal and Advertising Injury Offenses
Coverage B responds to a closed list of offenses — several are intentional, which is why they are separated from BI/PD.
| Offense | Plain Meaning |
|---|---|
| False arrest, detention, imprisonment | Wrongful restraint |
| Malicious prosecution | Wrongfully starting criminal proceedings |
| Wrongful eviction, wrongful entry, invasion of privacy of a room or dwelling | Improper occupancy interference |
| Oral or written publication that libels or slanders | Defamation |
| Oral or written publication violating right of privacy | Unauthorized disclosure of private facts |
| Use of another's advertising idea | Misappropriation in your ad |
| Infringing copyright, trade dress, or slogan in your advertisement | Limited advertising IP — not patent or trademark |
Exam trap: Patent and trademark infringement are excluded from PAI. Only copyright, trade dress, and slogan in your advertisement may be covered.
The expected or intended injury exclusion applies to BI/PD under Coverage A, not to the listed PAI offenses. Defamation in an advertisement may be covered under Coverage B even though intentional.
CGL Limit Structure
Limits interact — the exam tests stacking.
| Limit | Function |
|---|---|
| Each occurrence | Maximum for BI + PD from one occurrence |
| General aggregate | Annual cap for Coverage A (non-products), Coverage B, and Med Pay |
| Products-completed operations aggregate | Separate annual cap for products and completed-work BI/PD |
| Personal and advertising injury | Maximum for all PAI to any one person or organization |
| Damage to premises rented to you | Sub-limit (often $100,000 or $300,000) |
| Medical expense | Per-person sub-limit for Coverage C |
Worked Aggregate Example
Limits: $1,000,000 each occurrence / $2,000,000 general aggregate.
Three unrelated BI claims in one policy year: $800,000, $700,000, and $900,000 (total demanded: $2,400,000).
- Each claim is within the $1,000,000 occurrence cap.
- But the general aggregate caps total payments at $2,000,000.
- Insurer pays $2,000,000; insured retains $400,000 exposure.
Products or completed-operations claims draw on the separate products-completed aggregate, not the general aggregate for those losses.
Defense Costs and Supplementary Payments
The CGL duty to defend is broad. Under Supplementary Payments — Coverages A and B, defense costs are paid in addition to limits (not inside them — unlike many professional liability forms with "wasting" limits).
Supplementary Payments include:
- Defense expenses and bond costs up to policy limits
- Up to $250 for bail bonds required by covered accidents
- Reasonable expenses at insurer request, including up to $250 per day lost earnings
- Post-judgment interest on the entire judgment and certain pre-judgment interest
Once the insurer pays or offers the applicable limit, the duty to defend ends.
Medical Payments (Coverage C)
Med Pay is a goodwill, no-fault coverage for medical expenses of others injured on the insured's premises or arising from operations — not employees (workers comp territory) and not insureds themselves.
Because fault is irrelevant, Med Pay can defuse lawsuits — but amounts paid typically reduce any later Coverage A liability settlement to prevent double recovery.
Med Pay draws against the general aggregate.
| Coverage | Harm | Fault Required? | Aggregate |
|---|---|---|---|
| A — BI/PD | Physical injury, tangible property damage | Yes (negligence or strict liability) | General or products aggregate |
| B — PAI | Listed offenses | Offense-based | General |
| C — Med Pay | Medical bills of third parties | No | General |
Reading Scenarios: Four-Step Method
- Classify the harm — BI, PD, PAI offense, or none?
- Check the trigger — occurrence for Coverage A; offense for Coverage B.
- Apply exclusions — expected/intended for BI/PD; patent/trademark for PAI.
- Apply limits — occurrence first, then correct aggregate.
Nevada scenario: A Sparks furniture store's forklift operator backs into a customer's parked truck (property damage — Coverage A). The same week, the store's flyer falsely claims a competitor uses unsafe materials (libel in advertisement — Coverage B). A shopper trips on a display and needs stitches; Med Pay may pay initial bills (Coverage C) even before negligence is established. Three different coverage parts — one policy.
Connection to Prior Sections
Section 8.1 explained negligence and tort types. Section 8.2 covered damages categories and defenses. Section 8.3 explained which policy year responds. Section 8.4 tells you which coverage part within that policy pays. Later CGL chapters deepen exclusions and endorsements; without solid 8.4 vocabulary, those exclusions are harder to apply under exam time pressure.
Exam anchors: BI/PD = occurrence · PAI = offense list · data not tangible · defense outside limits · aggregates cap annual payouts.
A competitor sues an insured retailer because the insured's newspaper ad falsely states the competitor sells counterfeit goods. Which CGL coverage part most likely applies?
Under the standard ISO CGL, which of the following is considered property damage?
An insured's CGL has $1,000,000 each occurrence and $2,000,000 general aggregate limits. Three unrelated occurrences during the policy year each settle for $900,000. How much does the insurer pay in total?
Under the CGL Supplementary Payments for Coverages A and B, defense costs are generally: