8.4 Bodily Injury, Property Damage, and Personal/Advertising Injury
Key Takeaways
- Coverage A insures bodily injury and property damage from an occurrence; electronic data is not tangible property.
- Coverage B insures personal and advertising injury — listed offenses like libel, slander, false arrest, and wrongful eviction — which are covered intentional acts.
- Coverage C (Medical Payments) pays others' medical bills regardless of fault, with a low per-person sublimit and no litigation.
- The General Aggregate caps Coverages A, B, and C annually; products/completed operations have a separate aggregate.
- The Each Occurrence limit caps a single loss, but the aggregate can leave less available once it is eroded by prior claims.
Bodily Injury, Property Damage, and Personal/Advertising Injury
The CGL (CG 00 01) is built around three insuring agreements, each tied to a defined category of injury. The exam expects you to match a loss scenario to the correct Coverage — A, B, or C — and to the right limit. Misreading Personal and Advertising Injury as bodily injury is one of the most common test errors, so this section nails the definitions and the limit structure.
The three CGL coverages
| Coverage | Insures | Triggering offense/harm | Limit it erodes |
|---|---|---|---|
| Coverage A | Bodily Injury & Property Damage | An occurrence (accident) | Each Occurrence → General Aggregate (Products/Completed Ops Aggregate for those) |
| Coverage B | Personal & Advertising Injury | A listed offense | Personal & Advertising Injury limit → General Aggregate |
| Coverage C | Medical Payments | Injury on premises/operations, no fault needed | Medical Expense (sublimit) |
Coverage A — Bodily Injury and Property Damage
Bodily injury (BI) means bodily injury, sickness, or disease sustained by a person, including resulting death. Note it generally does not include purely mental or emotional injury unless it stems from a physical injury.
Property damage (PD) means: (1) physical injury to tangible property, including resulting loss of use; or (2) loss of use of tangible property that is not physically injured. Electronic data is not tangible property under the CGL — a frequent trap. Coverage A requires an occurrence — an accident, not an intended act.
Coverage B — Personal and Advertising Injury
Personal and advertising injury is injury arising out of a list of offenses, not from an accident. The seven offenses tested most often:
- False arrest, detention, or imprisonment
- Malicious prosecution
- Wrongful eviction or wrongful entry / invasion of right of private occupancy
- Slander or libel (oral or written disparagement of a person or organization)
- Invasion of privacy
- Use of another's advertising idea in your advertisement
- Infringing on copyright, trade dress, or slogan in your advertisement
These are intentional acts that are nonetheless covered — the exception to the "liability covers only accidents" rule.
Coverage C — Medical Payments and the limit structure
Medical Payments (Coverage C) pays reasonable medical expenses for bodily injury to others on the premises or from operations regardless of fault, usually within one year of the accident — a goodwill, no-litigation coverage with a low sublimit (e.g., $5,000 or $10,000 per person).
Limits stack as follows on the CGL:
- Each Occurrence Limit — most paid for all BI/PD from one occurrence (caps Coverage A and C combined).
- Personal & Advertising Injury Limit — per person/organization for Coverage B.
- General Aggregate — annual cap for Coverages A (non-products), B, and C.
- Products/Completed Operations Aggregate — separate annual cap for products and completed-ops claims.
Worked example: how limits erode
A policy carries an Each Occurrence limit of $1,000,000 and a General Aggregate of $2,000,000. During the year:
- Occurrence 1 pays $1,000,000 (premises slip-and-fall).
- Occurrence 2 pays $700,000 (a Coverage B libel claim).
The General Aggregate is reduced to $2,000,000 − $1,700,000 = $300,000. A third loss can pay no more than $300,000, even though the Each Occurrence limit is $1,000,000. Products/completed-ops losses would instead erode the separate products aggregate — the classic two-aggregate exam trap.
Key Coverage A exclusions to recognize
Coverage A is broad but carries pivotal exclusions the exam loves to test:
- Expected or intended injury — no coverage for harm the insured meant to cause.
- Contractual liability — assumed liability is excluded unless it is an insured contract.
- Workers compensation / employer's liability — bodily injury to employees is excluded; that risk belongs on a WC policy.
- Pollution — the absolute pollution exclusion bars most environmental claims.
- Damage to your product / your work — the "business risk" exclusions; a faulty product injuring a person is covered, but replacing the defective product itself is not.
The distinction between third-party bodily injury/property damage (covered) and the insured's own defective work (excluded) is the heart of products and completed-operations testing.
Supplementary payments and the umbrella connection
Beyond the limits, the CGL pays Supplementary Payments: defense costs, up to a set amount for bail bonds, the cost of appeal bonds, prejudgment interest, and post-judgment interest. These do not erode the limits, unlike under some other liability forms.
When a single catastrophic claim threatens to exhaust the CGL's Each Occurrence or aggregate limits, a Commercial Umbrella sits above it, providing additional limits over the CGL, auto, and employer's liability underlying policies. The umbrella may also drop down to fill gaps (subject to a self-insured retention), which is why matching the umbrella's required underlying limits to the CGL is a standard producer task.
A tenant sues the insured building owner for wrongful eviction and defamatory statements made during the dispute. Under the CGL, which coverage responds?
A CGL has a $1,000,000 Each Occurrence limit and a $2,000,000 General Aggregate. The insurer has already paid $1,000,000 and $800,000 on two separate non-products occurrences this year. What is the most the policy can pay on a third non-products occurrence?
The Three Injury Categories - Definitions That Decide Coverage
Liability policies define exactly what kind of harm triggers coverage, and matching a fact pattern to the right category is a core exam skill.
| Category | Includes | Excludes |
|---|---|---|
| Bodily Injury (BI) | Physical injury, sickness, disease, resulting death | Pure emotional distress (in many forms) |
| Property Damage (PD) | Physical injury to tangible property + loss of use | Loss of use of intangible property/data |
| Personal & Advertising Injury (PAI) | Libel, slander, false arrest, wrongful eviction, copyright/slogan infringement in advertising | Bodily injury, breach of contract |
Worked example: a tenant wrongfully evicted by a landlord suffers personal injury (PAI) - not bodily injury - so Coverage B of the CGL responds, not Coverage A. A defamatory ad that injures a competitor's reputation is advertising injury under Coverage B.
Exam Trap: Property damage includes loss of use of tangible property even when the property itself is not physically harmed - a business shut down by a covered event suffers PD-related loss of use. But damage to purely electronic data is not tangible property damage under the standard CGL.