3.2 Pennsylvania General Liability Insurance

Pennsylvania's Negligence System

Liability insurance responds to the insured's legal liability for negligence, so producers must understand how Pennsylvania allocates fault. Pennsylvania follows modified comparative negligence under the Comparative Negligence Act, applying the '51% bar' rule:

• A claimant whose own fault is 51% or more (i.e., greater than the combined fault of the defendants) recovers nothing.
• A claimant who is 50% or less at fault recovers, but the award is reduced by their own percentage of fault.

Worked example: A jury awards $100,000 and finds the plaintiff 30% at fault. The plaintiff is below the bar, so they recover $100,000 − 30% = $70,000. If the plaintiff had been found 55% at fault, they would recover $0. Contrast this with 'pure' comparative-fault states, where even a 90%-at-fault plaintiff recovers 10% — Pennsylvania does not. This 51% bar is a common exam distinction.

The Fair Share Act and Joint vs. Several Liability

For accidents on or after June 28, 2011, Pennsylvania's Fair Share Act (42 Pa.C.S. §7102) generally replaced traditional joint-and-several liability with several (proportionate) liability: each defendant pays only its own percentage share of the verdict. So a defendant found 20% at fault generally pays 20% of the judgment.

There are important exceptions where a defendant remains jointly and severally liable (potentially responsible for the entire judgment, with a right to seek contribution from co-defendants):

1. A defendant found 60% or more at fault;
2. Intentional misrepresentation (fraud);
3. An intentional tort;
4. Violations of the Hazardous Sites Cleanup Act (release of a hazardous substance);
5. Certain dram shop (alcohol service) liability cases.

This matters for limits selection: a commercial insured that could be 60%+ at fault — or sued for an intentional-tort theory — faces exposure to the entire verdict, supporting higher liability limits and umbrella coverage.

Commercial General Liability (CGL) in Pennsylvania

Pennsylvania commercial liability is written predominantly on the ISO Commercial General Liability (CGL) form, whose rates and forms are filed with and approved by the Pennsylvania Insurance Department. The standard CGL is an occurrence policy — coverage triggers when the bodily injury or property damage occurs during the policy period, regardless of when the claim is reported. (Claims-made forms, common in professional liability, trigger on the date the claim is first made, and use retroactive dates and tail/extended reporting periods.)

The CGL's insuring agreements are:

• Coverage A — Bodily Injury and Property Damage Liability: sums the insured becomes legally obligated to pay because of BI or PD caused by an 'occurrence.'
• Coverage B — Personal and Advertising Injury Liability: offenses such as libel, slander, false arrest, malicious prosecution, wrongful eviction, and advertising-related infringement.
• Coverage C — Medical Payments: small no-fault medical reimbursement for third parties injured on the premises, paid regardless of the insured's liability.

Common CGL exclusions tested include expected/intended injury, contractual liability (with the insured-contract carve-back), pollution, auto/aircraft/watercraft, employer's liability, and the professional services exclusion that pushes those exposures to a separate professional liability (E&O / malpractice) policy.

Punitive Damages, Professional Liability, and Limitations

Punitive damages are generally uninsurable

As a matter of Pennsylvania public policy, punitive (exemplary) damages are generally NOT insurable when assessed for the insured's own outrageous or reckless conduct — allowing insurance would defeat the deterrent purpose of the award. However, related compensatory damages remain insurable, and an employer may be able to insure vicariously assessed punitive damages arising solely from an employee's conduct. Producers should never promise that a liability policy will pay a directly-assessed punitive award.

Professional liability

Doctors, lawyers, accountants, architects, and similar professionals carry professional liability / errors & omissions (E&O) coverage, usually on a claims-made basis. Medical malpractice in Pennsylvania is further shaped by the MCARE Act, which requires qualifying health-care providers to carry primary coverage and participate in the MCARE Fund for excess medical-professional-liability exposure.

Statute of limitations

Pennsylvania's general statute of limitations is two years for personal-injury, wrongful-death, and most tort claims (measured from injury or reasonable discovery). The limitations tail drives the need for occurrence triggers, tail coverage on claims-made policies, and adequate reserves.

Other PA Liability Doctrines and Coverage Forms

Premises and dram-shop liability

Pennsylvania property owners owe duties that vary by the entrant's status — invitee, licensee, or trespasser — with the highest duty owed to business invitees. Dram-shop liability under the PA Liquor Code lets an injured third party recover from a licensed establishment that served a visibly intoxicated patron who then causes harm; as noted above, dram-shop defendants can face joint-and-several liability. Liquor liability is typically excluded from the CGL and written on a separate liquor liability policy.

Employers' liability and umbrella coverage

The CGL excludes injury to the insured's own employees (covered instead by Workers' Compensation and Employers' Liability, discussed in 3.3). To bridge gaps and add limits over the CGL, auto, and employers'-liability policies, commercial insureds buy commercial umbrella/excess coverage — important in Pennsylvania given the 60%-at-fault joint-liability trigger and the two-year claim tail.

Reservation of rights and the duty to defend

Under Pennsylvania law the duty to defend is broader than the duty to indemnify — if any allegation in the complaint potentially falls within coverage, the insurer must defend the entire suit, often under a reservation of rights while coverage is investigated. Wrongful refusal to defend can expose the insurer to bad-faith damages under 42 Pa.C.S. §8371, including interest, court costs, and attorney fees.