10.1 CGL Coverage A: Bodily Injury and Property Damage Liability

Coverage A: The Core Liability Grant

Commercial General Liability is built on the ISO Commercial General Liability Coverage Form CG 00 01, the standard occurrence form used nationwide (a current edition such as CG 00 01 04 13 is typical, with later editions adopted in most states). The CGL is one of the parts that can attach to a Commercial Package Policy (CPP) alongside the Common Policy Declarations, Common Conditions, and other coverage parts.

Coverage A is the heart of the policy. The insurer agrees to pay "those sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage to which this insurance applies," and it has the right and duty to defend the insured against any suit seeking those damages.

Key Defined Terms

• Bodily injury (BI): bodily injury, sickness, or disease sustained by a person, including death resulting from it at any time.
• Property damage (PD): physical injury to tangible property (including loss of use of that property) or loss of use of tangible property that is not physically injured.
• Occurrence: an accident, including continuous or repeated exposure to substantially the same general harmful conditions.

A claim triggers Coverage A only when BI or PD (1) results from an occurrence, (2) takes place in the coverage territory, and (3) happens during the policy period.

Occurrence vs. Claims-Made Triggers

The standard CG 00 01 is an occurrence form: it covers BI or PD that takes place during the policy period, no matter when the claim is filed. ISO also publishes a claims-made form (CG 00 02) for unstable or long-tail exposures.

Exam trap: On a claims-made policy with a retroactive date of 1/1/2020, an injury that occurred 12/1/2019 is not covered, even if the claim is reported during the current policy period. The retro date defeats it.

Basic Extended Reporting Period: the claims-made form provides an automatic, short tail (often 60 days to report, and a longer window for claims arising from occurrences reported during the policy term). A Supplemental ERP (the "tail") must be purchased by endorsement and can be unlimited in duration.

Worked Example: Completed Operations and the Aggregate

A roofing contractor finishes a job in January. In June, the roof leaks during a storm and damages the building owner's inventory. Because the work was completed and the damage arose away from premises the insured owns or rents, this is products-completed operations — it erodes the Products-Completed Operations Aggregate ($2,000,000 standard), not the General Aggregate.

How a Single Claim Flows Through the Limits

Assume standard ISO limits: Each Occurrence $1,000,000 / General Aggregate $2,000,000 / Products-Completed Operations Aggregate $2,000,000.

1. A premises slip-and-fall judgment of $1,250,000 is presented.
2. The Each Occurrence limit caps the insurer's payment at $1,000,000 for that single occurrence; the insured owes the remaining $250,000.
3. That $1,000,000 also reduces the General Aggregate from $2,000,000 to $1,000,000 remaining for the rest of the policy year.

Multiple suits, one occurrence: A warehouse explosion injures four customers, producing four suits totaling $1,600,000. Because all four arose from one occurrence, the $1,000,000 Each Occurrence limit is the most payable — the four claims share that single limit.

Defense costs are paid in addition to the limits (supplementary payments), so they do not erode the $1,000,000.

Coverage Territory and the "Damages" Test

Coverage A applies only to BI or PD that occurs in the coverage territory, which includes the United States, its territories and possessions, Puerto Rico, and Canada; international waters or airspace during travel between those places; and, for products made or sold there, anywhere in the world if the suit is brought in the coverage territory.

Coverage A vs. First-Party Property

A common confusion is that Coverage A pays for the insured's own damaged work or property. It does not. The CGL is third-party liability insurance — it responds when the insured is legally liable for harm to someone else's person or property. Damage to the insured's own product or completed work is addressed by the "your product" and "your work" exclusions.

Defense: A Separate, Valuable Right

The duty to defend is broader than the duty to indemnify. The insurer must defend any suit alleging covered damages, even if the allegations are groundless, false, or fraudulent. Once the insurer has paid the applicable limit in settlements or judgments, its duty to defend ends. Because defense costs are supplementary, a long, expensive defense does not reduce the dollars available to pay claimants — a key value of liability coverage that examiners test repeatedly.

Memory aid: Occurrence + Coverage Territory + Policy Period + Legal Liability = Coverage A responds. Remove any one element and the claim fails.