Property and Casualty Insurance · Casualty Insurance · 8 min read
CGL Injury, Damage, and Medical Benefits
- Distinguish between Coverage A insuring agreements, key definitions, and major policy exclusions.
- Explain the scope, conditions, and limit applications of Damage to Premises Rented to You.
- Differentiate the no-fault nature and eligibility rules of Coverage C Medical Payments from third-party liability coverages.
Coverage A: Insuring Agreement and Core Definitions
Commercial General Liability (CGL) Coverage A provides coverage for bodily injury and property damage. Under Coverage A, the insurer pays sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage. For coverage to apply, the bodily injury or property damage must occur during the policy period, be caused by an occurrence, and take place within the coverage territory, subject to all other policy terms.
The standard policy defines an occurrence as an accident, including continuous or repeated exposure to substantially the same general harmful conditions. Bodily injury means bodily injury, sickness, or disease sustained by a person, including death resulting from any of these. Property damage includes physical injury to tangible property, including all resulting loss of use of that property. Property damage also includes the loss of use of tangible property that is not physically injured. It is important to recognize that electronic data is specifically defined as not tangible property under standard CGL forms.
The insurer has both the right and the duty to defend the insured against any suit seeking damages covered by Coverage A. This duty to defend is broader than the obligation to pay judgments because it requires the insurer to provide legal representation even if the allegations are groundless. However, the insurer's duty to defend ends when the applicable policy limit has been exhausted by payment of judgments or settlements under Coverage A or B, or medical expenses under Coverage C.
Common mistakes
- Assuming that the seven-day rental limitation applies to fire damage under Damage to Premises Rented to You. Fire damage caused by the insured's negligence is covered regardless of the duration of the lease; the seven-day rule applies to certain non-fire perils.
- Believing that Coverage C requires proof of negligence. Coverage C is a no-fault coverage that pays reasonable medical costs without requiring legal liability.
- Thinking that supplementary payments reduce the policy's liability limits. Supplementary payments are paid in addition to the stated policy limits.
- Assuming that electronic data is protected under Coverage A property damage. Standard CGL forms specifically define electronic data as not tangible property.
Key points
- Coverage A pays covered sums the insured is legally obligated to pay for bodily injury or property damage that occurs during the policy period, is caused by an occurrence, and takes place within the coverage territory.
- Electronic data is explicitly excluded from the definition of tangible property under standard CGL forms.
- The insurer's duty to defend is broader than its duty to pay damages, and this duty ends when applicable limits are exhausted by judgments, settlements, or Coverage C payments.
- Host liquor liability is covered for businesses not in the alcohol industry, while commercial liquor liability is excluded.
- Damage to Premises Rented to You covers negligent fire damage regardless of rental length, but applies a seven-day maximum to non-fire perils.
- Coverage C pays eligible medical and funeral expenses without proof of fault if the expenses are incurred and reported within one year of the accident, subject to exclusions for certain people, including employees, people injured on premises they normally occupy, and athletic participants.
- Supplementary payments cover defense costs, certain bond premiums, and specified post-judgment interest in addition to the policy limits of insurance.
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