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

The Three Injury Categories

Liability forms do not pay for just any harm — they pay for specifically defined categories. The ISO Commercial General Liability form (CG 00 01) is the standard source of these definitions.

Bodily Injury Nuances

BI requires physical harm. Pure mental anguish or emotional distress with no accompanying physical injury is frequently litigated and may fall outside the BI definition unless an endorsement broadens it. Death is included because it results from bodily injury.

Property Damage and Loss of Use

Property damage has two prongs, and the exam tests the second one:

1. Physical injury to tangible property, including the resulting loss of use of that property.
2. Loss of use of tangible property that is NOT physically injured — for example, a contractor blocks access to a store with no physical damage, but the store loses business use of its premises.

Trap: PD applies only to tangible property. Pure economic loss, data (under older forms), and intangible rights are not tangible property and fall outside Coverage A.

Coverage B: Personal and Advertising Injury

The CGL splits its main liability into two coverages with separate limits.

• Coverage A — BI and PD, triggered by an occurrence during the policy period.
• Coverage B — personal and advertising injury, triggered by an offense committed during the policy period.

Covered Coverage B offenses include: false arrest/detention, malicious prosecution, wrongful eviction or invasion of privacy, libel and slander (oral or written defamation), use of another's advertising idea, and infringement of copyright, trade dress, or slogan in the insured's advertisement.

Split Limits vs. Combined Single Limit

Liability limits appear in two formats, and converting between them is common exam math.

Split Limits

Written as three numbers, e.g., 100/300/50 (in thousands):

• $100,000 — maximum BI per person.
• $300,000 — maximum BI per accident (all people combined).
• $50,000 — maximum PD per accident.

Worked example: A 100/300/50 insured causes an accident injuring three people (claims of $90,000, $120,000, $40,000) and causing $60,000 in property damage.

The insured pays the $20,000 BI shortfall and $10,000 PD shortfall out of pocket.

Combined Single Limit (CSL)

A CSL is one pooled amount (e.g., $300,000) available for BI and PD combined, with no internal per-person or per-category sublimits. The same accident above ($250,000 BI + $60,000 PD = $310,000) would be paid up to $300,000, leaving only a $10,000 total gap — more flexible than split limits.

Memory aid: Split-limit order is always per-person BI / per-accident BI / per-accident PD — small, big, property.

Aggregate Limits and Supplementary Payments

Beyond the per-occurrence limits, the CGL adds aggregate caps that limit the insurer's total payout over the policy year.

• Each Occurrence Limit — the most paid for any single occurrence (BI and PD combined under Coverage A).
• General Aggregate Limit — the most paid for all Coverage A occurrences plus Coverage B offenses during the policy period, typically excluding products-completed operations.
• Products-Completed Operations Aggregate — a separate annual cap for products and completed-work claims.
• Personal and Advertising Injury Limit — a per-person/organization cap for Coverage B, subject to the general aggregate.

Supplementary Payments

The CGL pays certain costs in addition to the limits, so they do not erode coverage: defense costs, the premium on appeal/release bonds (up to $250 for bail bonds), prejudgment interest, and reasonable expenses the insured incurs assisting the defense (up to $250/day for lost earnings).

Trap: On the CGL, defense costs are outside (in addition to) the limit as a supplementary payment, whereas many professional liability and umbrella forms pay defense inside the limit, eroding the amount left for damages. Watch which form the question describes.

Defense Cost Treatment and the Duty to Defend

The CGL imposes a duty to defend that is broader than the duty to indemnify: the insurer must defend any suit that potentially falls within coverage, even if groundless or fraudulent. Defense ends once the insurer exhausts the limit in settlements or judgments. On the standard CG 00 01, defense costs are paid as supplementary payments, outside the limit, so they do not erode the amount available for damages.

Trap: The duty to defend is triggered by a potential for coverage; the duty to indemnify arises only for actual covered damages. An insurer may owe a defense yet ultimately owe no indemnity - a distinction the exam tests directly.