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

Coverage B: Personal and Advertising Injury

While Coverage A responds to physical harm (BI/PD), Coverage B addresses non-physical, intangible harms. It covers liability for personal and advertising injury caused by an offense arising out of the insured's business. Unlike Coverage A, no occurrence is required — coverage hinges on the commission of an enumerated offense.

The CGL defines "personal and advertising injury" as injury, including consequential bodily injury, arising out of seven listed offenses:

• False arrest, detention, or imprisonment
• Malicious prosecution
• Wrongful eviction or wrongful entry, or invasion of the right of private occupancy
• Oral or written publication of material that slanders or libels a person/organization (defamation)
• Oral or written publication of material that violates a person's right of privacy
• Use of another's advertising idea in the insured's advertisement
• Infringing upon another's copyright, trade dress, or slogan in the insured's advertisement

Coverage B Traps and Exclusions

Note what Coverage B does not cover. Patent and trademark infringement are NOT covered — only copyright, trade dress, and slogan in an advertisement are. This is a classic exam distractor.

Key exclusions under Coverage B include:

• Knowing violation of the rights of another (intentional/willful publication of false material).
• Material published with knowledge of its falsity (defeats the defamation grant).
• Material first published before the policy period began.
• Breach of contract, except for an implied advertising contract.
• Quality or performance of goods (failure of goods to conform to advertised statements).

Exam trap: A store guard wrongfully detaining a shopper who turns out to be innocent is false detention — a Coverage B offense, NOT a Coverage A bodily injury claim, even if the shopper claims emotional distress.

Coverage B Limits and Aggregate Interaction

Coverage B carries its own Personal and Advertising Injury Limit, applied per person or organization for all damages from offenses against that one party in the policy period. Coverage B losses also erode the General Aggregate — the same aggregate shared with Coverage A premises-operations and Coverage C. They do not touch the Products-Completed Operations Aggregate.

Worked example: An insured carries a $1,000,000 Personal & Advertising Injury limit and a $2,000,000 General Aggregate. A defamation suit by one competitor settles for $700,000. A separate privacy-invasion suit by a different individual settles for $500,000. Each is within the $1,000,000 per-person/organization cap, so both are paid in full ($1,200,000 total), but together they reduce the General Aggregate to $800,000 — leaving less room for any subsequent Coverage A premises-operations losses that same year. This shared-aggregate mechanic is a favorite exam point.

Coverage C: Medical Payments

Coverage C — Medical Payments pays reasonable and necessary medical expenses for bodily injury caused by an accident on premises the insured owns/rents, or arising from the insured's operations. The defining feature: it pays regardless of fault (no negligence or legal liability required). It is goodwill coverage designed to prevent small injuries from escalating into lawsuits.

Coverage C payments erode the Each Occurrence limit. If a person accepts Coverage C medical payments and later sues, amounts already paid are typically credited against any Coverage A damages.

Coverage C Exclusions and a Worked Example

Coverage C will not pay for injury to:

• Any insured (the named insured, partners, employees).
• A person hired to do work for the insured or a tenant occupying the premises.
• A person injured while taking part in athletics.
• A person whose injury arises out of products-completed operations or is excluded under Coverage A.

Worked example: A customer slips in a retail store with a CGL carrying a $5,000 Coverage C per-person limit and a $1,000,000 each-occurrence Coverage A limit. The customer's immediate ER bill is $3,500, paid under Coverage C without proving fault. The customer later sues and is awarded $40,000. The insurer pays the $40,000 under Coverage A but credits the $3,500 already paid, so net new Coverage A payment is $36,500 — both payments together erode the same $1,000,000 each-occurrence limit.

Routing a Claim to Coverage B or C

Coverage B (Personal and Advertising Injury) and Coverage C (Medical Payments) handle exposures Coverage A does not. Coverage B responds to a closed list of offenses — false arrest, malicious prosecution, wrongful eviction, oral or written defamation, violation of privacy, use of another's advertising idea, and infringement of copyright/slogan in the insured's advertisement. Coverage C pays small medical bills for non-employees injured on the premises or by the insured's operations regardless of fault, with no admission of liability, up to a low limit (e.g., $5,000).

Coverage C is a goodwill, no-fault payment meant to head off larger liability claims; if the injured party later sues, the matter shifts to Coverage A. Coverage B specifically excludes knowing falsehood and breach of contract.