10.2 CGL Coverage B: Personal and Advertising Injury, Coverage C: Medical Payments

Coverage B: Personal and Advertising Injury

Coverage B of the CG 00 01 insures liability for personal and advertising injury caused by an offense arising out of the insured's business. Unlike Coverage A's physical-harm focus, Coverage B addresses non-physical harm — reputation, privacy, and the use of others' advertising ideas. There is no occurrence requirement and no "accident" element; an intentional offense can be covered because the offense itself is the trigger.

The policy enumerates seven offenses:

1. False arrest, detention, or imprisonment
2. Malicious prosecution
3. Wrongful eviction, wrongful entry, or invasion of the right of private occupancy (of a room/dwelling the person occupies, by or on behalf of the landlord/owner)
4. Oral or written publication of material that slanders or libels a person or organization or disparages goods/services
5. Oral or written publication of material that violates a person's right of privacy
6. The use of another's advertising idea in the insured's advertisement
7. Infringing upon another's copyright, trade dress, or slogan in the insured's advertisement

Key Coverage B Exclusions

Coverage B has its own exclusion list distinct from Coverage A. Important ones:

• Knowing violation of rights (the insured knew the act would violate rights and inflict P&AI)
• Material published with knowledge of falsity
• Material first published before the policy period
• Breach of contract
• Quality or performance of goods (failure to conform to statements)
• Wrong description of prices
• Infringement of copyright, patent, trademark, or trade secret — except the specific advertising-idea/trade-dress/slogan offenses listed above. Notice the trap: general patent and trademark infringement are excluded, but copyright/trade-dress/slogan in your advertisement are covered offenses.

Coverage B is subject to its own Each Occurrence-style limit (Personal and Advertising Injury Limit) and shares the General Aggregate.

Worked Example: P&AI Limit and the Aggregate

Assume a Personal and Advertising Injury Limit of $1,000,000 and a General Aggregate of $2,000,000. A defamation suit settles for $800,000 and an invasion-of-privacy suit settles for $700,000. Each is below the $1M P&AI per-offense limit, so each is paid in full. Combined = $1,500,000, which is within the $2,000,000 General Aggregate, so both are paid in full. Because Coverage B shares the General Aggregate with Coverage A, those payments reduce the room available for later Coverage A occurrences — only $500,000 of General Aggregate remains.

Coverage C: Medical Payments

Coverage C — Medical Payments pays reasonable medical expenses for bodily injury caused by an accident:

• on premises the insured owns or rents;
• on ways next to (immediately adjoining) those premises; or
• because of the insured's operations.

The defining feature is that Coverage C is no-fault and goodwill coverage: it pays regardless of the insured's legal liability, which is what distinguishes it from Coverage A. It functions to settle small injuries quickly and discourage lawsuits.

Conditions and Limits

• Expenses must be incurred and reported within one year of the accident date.
• The injured person must submit to exams by the insurer's physicians as often as reasonably required.
• A typical Medical Expense Limit is $5,000 per person (a sub-limit, paid within and not in addition to the Each Occurrence limit; amounts paid under Coverage C reduce the Each Occurrence limit available).
• Med Pay covers reasonable expenses for first aid at the time of an accident, necessary medical, surgical, X-ray, and dental services (including prosthetics), and funeral expenses.

Who Coverage C Does NOT Cover

Coverage C excludes medical payments to:

• Any insured (other than a volunteer worker)
• A person hired by or to perform duties for any insured
• A person injured on the part of premises the insured normally occupies (a tenant)
• A person whose injury is covered by workers compensation
• Persons injured while taking part in athletics
• Injury arising out of products-completed operations or excluded under Coverage A

Worked Example

A customer slips in a store and the insured offers to cover the $3,200 ER bill under Coverage C ($5,000 per-person limit). The insurer pays $3,200 with no liability finding. If the customer later sues for $250,000 in pain and suffering, that claim moves to Coverage A, and the $3,200 already paid under Coverage C reduces the Each Occurrence limit available for the Coverage A judgment.

Why Med Pay Exists — The Goodwill Rationale

Medical Payments is sometimes called "goodwill" coverage because its purpose is to settle minor injuries before they become liability claims. By paying a small bill quickly and without admitting fault, the insured maintains customer relations and the insurer avoids the far larger defense and settlement costs of a Coverage A lawsuit. This is why fault is irrelevant and the per-person limit is small. Note that Med Pay can be deleted by endorsement (CG 21 16) for insureds whose exposure is better handled entirely under Coverage A, or excluded for designated premises or work.