8.2 Coverage A: Bodily Injury and Property Damage

What Coverage A Provides

Coverage A is the heart of the CGL. 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 the insurance applies, and to defend any suit seeking those damages.

Key Definitions (Memorize Exactly)

Bodily injury (BI): physical harm, sickness, or disease sustained by a person, including death resulting from any of these. Mental anguish is included only when it flows from a physical injury; purely emotional distress with no physical component is generally not BI.

Property damage (PD) has two parts:

Trap: Electronic data is not tangible property, so corrupting a customer's data is not PD under the unendorsed CGL. Loss of use is deemed to occur at the time of the occurrence that caused it.

The Occurrence Requirement

Coverage A applies only to BI/PD caused by an occurrence: "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."

Two Hazard Groups Within Coverage A

1. Premises-Operations

BI/PD arising from the ownership, maintenance, or use of premises and from ongoing operations, whether at the insured's location or away from it.

2. Products-Completed Operations Hazard (PCOH)

BI/PD arising away from premises the insured owns or rents and arising out of the insured's product or completed work.

• Products — goods after they leave the insured's possession.
• Completed operations — work is "completed" at the earliest of: all work called for in the contract is done; all work at a job site is done; or that portion is put to its intended use.

Why this matters: PCOH claims are capped by a separate Products-Completed Operations Aggregate, protecting premises-operations limits (see Section 8.6).

Conditions for Coverage A to Apply

All four must be met:

1. BI/PD caused by an occurrence;
2. Occurring during the policy period;
3. Within the coverage territory;
4. The insured had no prior knowledge the injury had occurred before the policy began (known-loss provision). If part of a continuous injury was known before inception, that injury is deemed known at all later times.

Damages Covered vs. Not Covered

Coverage Territory

Coverage A applies to injury in: the United States (including its territories and possessions), Puerto Rico, and Canada; international waters/airspace during transit between those places; and on a worldwide basis for the insured's products made/sold in the U.S./Canada and for the activities of a person whose home is in the coverage territory who is away for a short time on the insured's business — provided the suit is brought in the coverage territory.

Premises-Operations vs. Products-Completed Operations — the Timing Test

The most reliable way to classify a Coverage A loss on the exam is to ask when the injury happened relative to the work:

• If the harm occurred while operations were ongoing or on/next to the insured's premises, it is premises-operations.
• If the harm occurred after the work was completed and away from the insured's premises, it is products-completed operations.

Why the line matters financially: premises-operations losses erode the General Aggregate, while products-completed operations losses erode a separate aggregate. A business with heavy product exposure therefore has two distinct pools of aggregate protection.

The Known-Loss (Known-Injury) Provision in Practice

The fourth condition — no prior knowledge — exists to stop an insured from buying coverage for a loss already in progress. If, before the policy began, any insured listed in the Declarations knew that BI or PD had occurred (in whole or in part), the policy treats the entire injury as known and excludes it, including any continuation or resumption after inception.

Worked example: A manufacturer learns in November that a batch of products is leaking a corrosive chemical and damaging customers' equipment, then buys a CGL effective January 1. Damage that continues into the new policy year is deemed known and is not covered, because knowledge existed before inception. Coverage A is meant for fortuitous (accidental, uncertain) losses, not for losses the insured has already discovered.