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

The Three Liability Coverages of the CGL

The ISO Commercial General Liability form (CG 00 01) provides three insuring agreements. The exam expects you to match a loss to the correct one:

• Coverage A – Bodily Injury and Property Damage Liability
• Coverage B – Personal and Advertising Injury Liability
• Coverage C – Medical Payments (no-fault, small limits, no proof of liability needed)

Coverages A and B require the insured to be legally liable; Coverage C pays regardless of fault. Each carries its own limit within the policy's limit structure (discussed below).

Defining the Injury Types

Bodily injury (BI) under CG 00 01 means "bodily injury, sickness, or disease sustained by a person, including death" resulting from it. ISO BI excludes purely emotional distress unless it flows from physical harm (some states/endorsements broaden this).

Property damage (PD) means (1) physical injury to tangible property, including loss of use, and (2) loss of use of tangible property that is not physically injured. Key trap: electronic data is not tangible property under standard CGL, and economic loss without physical damage is generally not PD.

Personal and advertising injury (Coverage B) is a closed list of offenses, not accidents—covered even when intentional, because the harm is to reputation or rights rather than physical.

Coverage B: The Seven Offenses

Personal and advertising injury is defined as injury arising out of one or more of these enumerated offenses:

Trap: patent and trademark infringement are NOT covered (only copyright, trade dress, and slogan are). Breach of contract and knowing-falsehood publication are excluded.

Limits Structure and a Worked Aggregate Example

The CGL stacks limits in this order:

• Each Occurrence Limit – most paid for any one occurrence (BI + PD combined).
• Personal & Advertising Injury Limit – per person/organization, capped by the General Aggregate.
• General Aggregate Limit – most paid in the policy year for Coverage A (non-products), Coverage B, and Coverage C combined.
• Products/Completed Operations Aggregate – separate annual cap for products/completed-ops claims.
• Medical Payments Limit and Damage to Premises Rented to You Limit – sublimits.

Worked example: Limits are $1M Each Occurrence / $2M General Aggregate. Three separate non-products occurrences cost $800K, $900K, and $700K = $2.4M. Each occurrence is under the $1M per-occurrence cap, but the General Aggregate stops payment at $2M—the insured retains the remaining $400K. This is why aggregate erosion mid-year is a key disclosure.

Coverage C Medical Payments and Common Exclusions

Coverage C – Medical Payments is a small goodwill, no-fault coverage: it pays reasonable medical expenses for bodily injury to a non-insured from an accident on the insured's premises or operations, without proof of liability, if incurred and reported within one year. Typical limits run $5,000-$10,000 per person, and paying a minor injury can head off a larger Coverage A suit.

Key CGL exclusions the exam links to these coverages include:

• Expected or intended injury (intentional acts)—but reasonable force to protect persons or property is carved back.
• Contractual liability—except an "insured contract."
• Workers compensation / employer's liability—employees are excluded; that exposure belongs on the WC and EL policy.
• Pollution—broadly excluded, addressed by separate environmental coverage.
• Auto, aircraft, and watercraft—covered under their own policies.

Combined Single Limit vs. Split Limits

Liability limits are expressed two ways, and the exam expects the arithmetic:

• Split limits appear as three numbers, e.g., 100/300/50: $100,000 BI per person, $300,000 BI per accident (all people), and $50,000 PD per accident.
• Combined single limit (CSL): one pooled amount, e.g., $300,000 CSL, applies to BI and PD together however the loss falls.

Worked split-limit example: Under 100/300/50, an at-fault accident injures three people with claims of $90,000, $150,000, and $120,000 (total $360,000) plus $40,000 PD. Each person is capped at $100,000, so the BI payouts are $90,000 + $100,000 + $100,000 = $290,000, within the $300,000 per-accident cap. PD pays $40,000 (under $50,000). Total paid = $330,000; the injured parties absorb the $70,000 shortfall ($50,000 above one person's cap plus $20,000 above the per-accident BI cap). A $300,000 CSL would instead pay all $400,000 only up to $300,000—showing why CSL and split limits respond differently to the same facts.

Defining Bodily Injury and Property Damage

Liability forms define bodily injury (BI) as physical injury, sickness, or disease, including death resulting from any of these; purely emotional harm without physical injury often falls outside the definition unless it accompanies bodily injury. Property damage (PD) means physical injury to tangible property, including resulting loss of use, and loss of use of tangible property that is not physically injured. Because the definitions are precise, candidates must test a claimed harm against the exact wording rather than ordinary usage.

Personal Injury and Advertising Injury Offenses

Personal and advertising injury is liability for a listed offense, not for negligence generally. The personal-injury offenses are false arrest or imprisonment, malicious prosecution, wrongful eviction or invasion of private occupancy, slander and libel (defamation), and violation of a person's right of privacy. Advertising-injury offenses add use of another's advertising idea, infringement of copyright, trade dress, or slogan in your advertisement. Coverage responds only if the claim matches an enumerated offense, which is why patent and trademark infringement are typically not covered.

The "Your Product / Your Work" and Loss-of-Use Themes

A key liability concept is that policies cover damage the insured's product or work causes to other property or persons, but exclude the cost to repair or replace the insured's own defective product or work (the business-risk exclusions). Loss of use can be a covered element of property damage even with no physical injury, for example when a contractor's error makes a building unusable. Distinguishing third-party damage (covered) from the insured's own faulty workmanship (excluded) is essential for CGL scenario questions.