10.1 CGL Coverage A: Bodily Injury and Property Damage Liability

The Coverage A Insuring Agreement

Coverage A appears in the ISO Commercial General Liability Coverage Form CG 00 01 (current edition CG 00 01 04 13). 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 it has the right and duty to defend any suit seeking those damages.

Two gatekeepers must both be satisfied before Coverage A responds: the injury or damage must be caused by an occurrence, and it must take place in the coverage territory during the policy period.

The Occurrence Trigger

The CGL is written on an occurrence basis (the standard CG 00 01) unless a claims-made form (CG 00 02) is used. An occurrence is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." The word accident is the trap: injury that is expected or intended from the standpoint of the insured is excluded, except reasonable force to protect persons or property.

The occurrence trigger matters for long-tail losses such as gradual pollution or repeated exposure. Because the standard CGL responds to injury that occurs during the policy period regardless of when the claim is filed, a 2026 occurrence policy can still owe defense and indemnity for a suit filed years later, as long as the BI or PD took place while that policy was in force.

Key Definitions (Memorize Exactly)

Bodily injury (BI): bodily injury, sickness, or disease sustained by a person, including death resulting from any of these. Mental anguish counts only when it flows from a physical injury; purely emotional distress is handled under Coverage B, not A.

Property damage (PD): (1) physical injury to tangible property, including resulting loss of use, or (2) loss of use of tangible property that is not physically injured. Exam trap: electronic data is NOT tangible property under the CGL, so corrupting a customer's data file is not PD.

The Two Coverage A Hazard Groups

Work is in completed operations once it is put to its intended use OR when all work at the job site is done — whichever happens first. The distinction drives which aggregate erodes: a customer slipping in the insured's shop today is Premises-Operations (General Aggregate), but a deck the insured built last year collapsing today is Products-Completed Operations (separate aggregate). Examiners love fact patterns that turn on whether the work was still in progress.

How the Four Limits Interact

A typical CGL declarations page shows four limits. Assume: Each Occurrence $1,000,000 / General Aggregate $2,000,000 / Products-Completed Operations Aggregate $2,000,000 / Damage to Premises Rented to You $300,000.

• The Each Occurrence limit ($1M) caps the most paid for any single occurrence, combining BI and PD.
• The General Aggregate ($2M) caps total Premises-Operations payments for the policy period.
• The Products-Completed Operations Aggregate ($2M) is a separate bucket — Premises-Operations claims do NOT erode it.

Worked example: Three premises slip-and-fall occurrences settle for $800,000, $900,000, and $700,000 = $2,400,000 demanded. Each is under the $1M Each Occurrence cap, but the General Aggregate is $2M. The insurer pays $2,000,000 and the insured absorbs the remaining $400,000. A later products claim still has its own full $2M aggregate available.

Defense Costs and the Supplementary Relationship

Defense costs (attorney fees, investigation, and court costs charged against the insured) are paid in addition to the limits of insurance — they do not reduce the $1M/$2M figures. This is a major exam contrast with most professional liability / D&O forms, which are usually written with defense inside the limits, often called eroding or "wasting" limits because every dollar of defense shrinks what is left to pay a judgment.

The insurer's duty to defend ends when the applicable limit of insurance has been exhausted by the payment of judgments or settlements. Once the insurer pays out the full aggregate, defense stops even if suits remain pending. The insurer also has the right, not just the duty, to investigate and settle any claim or suit at its discretion.

The Coverage Territory and Policy Period

Coverage A applies only to BI or PD that occurs in the coverage territory during the policy period. The coverage territory includes the United States, its territories and possessions, Puerto Rico, and Canada. It also extends worldwide for the insured's products sold in the U.S. territory and for the activities of a person away from home on short business trips, provided the suit is brought within the coverage territory.

Common Coverage A Traps

• BI and PD share the Each Occurrence limit — they are not separate towers.
• "Legally obligated to pay" means a tort claim; liability assumed under contract is addressed by the contractual-liability exclusion and its insured-contract carve-back.
• Electronic data is expressly excluded from the definition of tangible property.
• The Damage to Premises Rented to You sub-limit is the fire-damage carve-back to the property-damage-to-rented-premises exclusion, commonly $300,000 in current forms.