Policy Basics
True or False: In the CG 00 01, Coverage C provides coverage for bodily injury and property damage claims resulting from your business operations.
False.
Coverage A provides coverage for bodily injury and property damage claims resulting from your business operations.
Coverage C is no-fault Medical Payments coverage.
This category of liability exposure applies to injuries or damage occurring at the insured’s business premises.
Premises Liability
What are policy limits in a CGL policy?
The maximum amount an insurer will pay for covered claims.
What are some common exclusions in a CGL policy?
Common exclusions include:
• Expected or intended injury
• Workers’ Compensation
• Pollution
• Auto-related exclusions
A contractor completes a roofing job, but the roof itself is later found to be defective and must be replaced. No other property is damaged.
Would this be covered under a CGL policy?
This is typically excluded under the “Your Work” exclusion, which does not cover the cost to repair or replace the insured’s own faulty work.
This section of the policy lists the specific risks or situations that are not covered under the CGL.
Exclusions
Under a CGL policy, this coverage addresses claims arising from products after they have been sold or distributed.
Products-Completed Operations Liability
How do aggregate limits differ from per-occurrence limits in a liability insurance policy?
Aggregate limits apply to the total amount paid for all claims during the policy period, while per-occurrence limits apply to individual claims.
How can endorsements be used to modify a policy?
Endorsements can add, remove, or change coverage to better fit a business’s specific risks.
A customer experiences a medical episode on the insured’s premises.
Does this trigger coverage under the Coverage A insuring agreement?
No, not necessarily. A medical episode alone does not automatically trigger Coverage A, because the insuring agreement requires bodily injury caused by an occurrence (accident).
If the medical episode is purely internal (for example, a spontaneous fainting or heart condition), there may be no occurrence attributable to the insured, and Coverage A would not be triggered.
However, if the medical episode leads to a separate, injury-producing event—such as the customer fainting and striking their head on the ground—this may constitute an occurrence, as the fall itself can be considered an accidental event. In that case, Coverage A may be triggered even in the absence of the insured's negligence.
Additionally, if the insured’s negligence contributed to or worsened the injury (for example, unsafe conditions or failure to respond appropriately), this would further support a Coverage A trigger.
True or False: CGL Insurance covers damage to your own business property.
False.
It covers third-party liability, not the insured’s own property—that’s first-party coverage.
This coverage part of a CG 00 01 form, addresses claims such as libel, slander, and false arrest.
Coverage B (Personal and Advertising Injury Liability)
True or False: If a liability claim exceeds the insured’s policy limits, the insured is responsible for paying the amount above those limits.
True.
If a claim exceeds the insured’s policy limits, the insured is responsible for the excess amount, unless additional coverage (such as an umbrella or excess liability policy) is in place.
True or False: A standard CGL policy covers claims for employee injuries that occur on the job.
False.
Employee injuries are typically covered under workers’ compensation, not CGL.
The insured is a photography business that provides Santa and Easter Bunny photo services in malls nationwide. They do not own the mall premises but operate there under agreements. A claim arises when a customer is injured while taking a photo.
Would Coverage A and Coverage C be triggered?
Coverage A may be triggered because there is an occurrence resulting in bodily injury arising out of the insured’s ongoing operations (photography services being performed at the time of the injury), assuming the occurrence falls within the coverage territory and policy period.
Coverage C may also apply. Even though the insured does not own the mall, Coverage C may still be triggered if the injury resulted from the insured's ongoing operations, subject to policy terms and limits.
This part of the policy covers legal expenses, such as attorney fees and court costs, in the event of a covered liability claim.
Supplementary Payments
What is the difference between occurrence-based and claims-made policies?
Occurrence-based: covers incidents that occur during the policy period, regardless of when the claim is reported.
Claims-made: covers claims reported during the policy period, typically as long as the incident occurred after the retroactive date.
What is the difference between general aggregate limits and products-completed operations aggregate limits in a CGL policy?
The general aggregate applies to most claims during the policy period, while the products-completed operations aggregate applies specifically to claims from products and completed work.
Why might businesses engaged in high-risk operations require specialized endorsements on their CGL policy?
Because standard CGL policies may exclude or limit coverage for certain high-risk activities, endorsements are needed to extend or customize coverage for those exposures.
An insured employee is unloading furniture from a company truck when it falls and damages a third party’s property.
How would coverage be determined under a CGL policy?
Coverage determination depends on whether the loss falls within the auto exclusion, specifically the loading and unloading provision.
Under a standard CGL policy, BI or PD arising out of the use of an auto—including loading or unloading—is typically excluded. Since the damage occurred while the employee was unloading furniture from a company truck, this activity would generally be considered use of an auto.
Therefore, this loss would typically be excluded under the CGL policy and instead fall under the commercial auto policy, if applicable.
This condition in a CGL policy requires the insured to notify the insurer of an occurrence or claim as soon as practicable and to cooperate in the investigation and defense.
Duties in the Event of Occurrence, Offense, Claim or Suit condition
Once a project is finished and in use, claims arising from that work fall under ________.
Completed Operations Liability
How do defense costs typically apply to liability policy limits under a standard CGL policy?
Defense costs are typically paid in addition to the policy limits in a standard CGL policy, meaning they do not reduce the amount available to pay claims.
Why is contractual liability limited or excluded in a standard CGL policy, and how is coverage still provided in certain situations?
Contractual liability is limited to prevent broad coverage for obligations assumed under contracts; however, the policy includes key exceptions (such as liability the insured would have without the contract and “insured contracts”), and coverage can be further clarified or expanded through endorsements.
Our insured is a general contractor who completes renovations on a retail store. Six months later, a customer is injured when a ceiling fixture installed by the insured falls. Investigation shows the fixture was improperly secured during installation. The store owner also demands reimbursement for the cost of repairing the defective installation and replacing the fixture.
How would coverage be determined under the contractor’s CGL policy?
This scenario involves products-completed operations exposure, as the injury occurred after the insured's work was finished and put to its intended use.
Coverage A may apply to the bodily injury claim, as it arises from an occurrence (accident) caused by the insured's completed work, assuming all insuring agreement requirements are met, and no exclusions apply.
However, the cost to repair or replace the defective work itself (the improperly installed fixture) is typically excluded under the “your work” exclusion, which bars coverage for the insured’s own faulty workmanship.
If the falling fixture caused additional damage to other property, that resulting damage may be covered, even though the defective work itself is not.