The Commercial General Liability (CGL) coverage form insures a business against claims by outsiders: a customer who falls in the store, a building damaged by a contractor's work, a person hurt by a defective product, a competitor defamed in an ad. Exams use ISO's occurrence form CG 00 01 04 13 (the claims-made version is CG 00 02), so the figures below come from it. State amendatory endorsements can change some conditions, such as nonrenewal notice.

Structure

• Section I Coverages: Coverage A (bodily injury and property damage liability), Coverage B (personal and advertising injury liability), Coverage C (medical payments), and supplementary payments.
• Section II Who Is An Insured.
• Section III Limits of Insurance.
• Section IV Conditions.
• Section V Definitions.

Coverage A: bodily injury and property damage

The insurer pays damages the insured is legally obligated to pay because of bodily injury or property damage caused by an occurrence in the coverage territory during the policy period, and has the right and duty to defend suits seeking those damages.

• Occurrence: an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
• Property damage: physical injury to tangible property including resulting loss of use, or loss of use of tangible property that is not physically injured. Electronic data is not tangible property.
• Known injury: injury or damage an insured or authorized employee knew about before the policy period is not covered by the new policy, even if it continues.
• Coverage territory: the U.S., its territories and possessions, Puerto Rico and Canada, plus limited worldwide coverage for specified situations (such as products sold in the territory) when the suit is brought in the U.S., its territories, Puerto Rico or Canada.

Two exposure groups

• Premises and operations: the insured's premises and ongoing work. A customer slipping inside the store.
• Products-completed operations hazard: injury or damage away from the insured's premises arising from your product (goods the insured makes, sells, handles or distributes, including warranties and instructions) or your work after it is completed. A plumber's repair that floods a house a week after the plumber left. Work is completed at the earliest of: all contract work done, all work at the job site done, or that part of the work put to its intended use by someone other than another contractor on the project.

Coverage A exclusions

• a. Expected or intended injury (except reasonable force to protect persons or property).
• b. Contractual liability, except liability assumed in an insured contract or that the insured would have without the contract. Insured contract includes a lease of premises, sidetrack agreement, easement or license agreement (except construction or demolition within 50 feet of a railroad), an obligation to indemnify a municipality required by ordinance, an elevator maintenance agreement, and the assumption of another's tort liability in a business contract.
• c. Liquor liability for insureds in the business of manufacturing, distributing, selling, serving or furnishing alcohol (social host liquor exposure remains covered). Bars and restaurants buy the Liquor Liability Coverage Form (CG 00 33) for dram shop exposure.
• d. Workers compensation and similar laws; e. Employer's liability, including consequential injury to an injured employee's family.
• f. Pollution, with narrow exceptions such as smoke or fumes from equipment used to heat, cool or dehumidify a building, and hostile fire.
• g. Aircraft, auto or watercraft owned, operated, rented or loaned to an insured. Exceptions: watercraft ashore on premises the insured owns or rents; non-owned watercraft under 26 feet not carrying persons or property for a charge; parking a non-owned, non-rented auto on or next to the insured's premises; certain mobile equipment.
• h. Mobile equipment being transported by an auto or used in racing. (Most other mobile equipment liability is covered by the CGL: bulldozers, farm machinery, forklifts used only on premises.)
• i. War.
• j. Damage to property owned, rented or occupied by the insured, or in its care, custody or control, or that particular part of real property being worked on.
• k. Damage to your product; l. Damage to your work in the completed operations hazard, except work performed on the insured's behalf by a subcontractor (CG 22 94 removes that exception).
• m. Impaired property: loss of use of property that is not physically injured but is less useful because of the insured's defective product or work.
• n. Recall of products (sistership): costs of withdrawing or recalling products.
• o. Personal and advertising injury (it belongs under Coverage B).
• p. Electronic data loss.
• q. Recording and distribution of material in violation of law (TCPA, CAN-SPAM, FCRA and similar laws).

The damage to premises rented to you exception gives back coverage for fire damage to premises rented to the insured and any damage to premises rented for 7 or fewer consecutive days, subject to its own limit.

Coverage B: personal and advertising injury

Coverage B pays for injury arising from listed offenses, not accidents:

1. False arrest, detention or imprisonment.
2. Malicious prosecution.
3. Wrongful eviction, wrongful entry or invasion of the right of private occupancy.
4. Oral or written publication that slanders or libels or disparages goods, products or services.
5. Oral or written publication that violates a person's right of privacy.
6. Use of another's advertising idea in your advertisement.
7. Infringing another's copyright, trade dress or slogan in your advertisement.

Exclusions include knowing violation of another's rights, publication knowing it is false, prior publication (first published before the policy period), criminal acts, contractual liability, breach of contract, quality or performance of goods not matching advertised claims, wrong description of prices, other intellectual property infringement (patents, trade secrets), insureds in media and internet businesses (advertising, broadcasting, publishing, telecasting), pollution, war, and distribution of material in violation of law.

Coverage C: medical payments

• Pays reasonable medical expenses for bodily injury caused by an accident on premises the insured owns or rents or because of its operations, regardless of fault, if the expenses are incurred and reported within one year of the accident (homeowners and auto use 3 years).
• Exclusions: any insured (volunteer workers excepted); a person hired to work for an insured; a person injured on premises they normally occupy (tenants); anyone eligible for workers compensation; injury during athletic activities; the products-completed operations hazard; anything excluded under Coverage A.

Supplementary payments (Coverages A and B)

Paid in addition to the limits: expenses the insurer incurs (defense), up to $250 for bail bonds from vehicle use, appeal and release-of-attachment bond premiums, reasonable expenses of the insured at the insurer's request including up to $250 a day lost earnings, court costs, prejudgment interest on the part of the judgment the insurer pays, and post-judgment interest. The duty to defend ends when the applicable limit is used up in paying judgments or settlements.

Who is an insured

• Individual: the named insured and spouse, but only for the conduct of a business the individual solely owns (personal liability belongs to homeowners coverage).
• Partnership or joint venture: members, partners and their spouses, for the conduct of the business.
• LLC: members for the conduct of the business; managers for their duties as managers.
• Organization: executive officers and directors for their duties; stockholders for their liability as stockholders.
• Employees and volunteer workers for acts within the scope of their duties, but not for bodily injury to a co-employee in the course of employment (left to workers compensation).
• A real estate manager, anyone with temporary custody of property if the named insured dies, and a legal representative.
• Operators of mobile equipment registered in the named insured's name.
• Newly acquired or formed organizations (other than partnerships, joint ventures or LLCs) until the 90th day or the end of the policy period, whichever is first, but not for injury or offenses that happened before acquisition.

Limits of insurance

Limits apply separately to each consecutive annual period and do not increase for more insureds, claims or claimants. Example: a $1,000,000 occurrence / $2,000,000 general aggregate policy that has paid $1,500,000 in premises claims can pay only $500,000 on the next premises judgment.

Conditions (Section IV)

1. Bankruptcy of the insured does not relieve the insurer.
2. Duties in the event of occurrence, offense, claim or suit: prompt notice, cooperation, send suit papers, no voluntary payments.
3. Legal action against us: no one may bring the insurer into a suit against the insured; recovery is allowed on an agreed settlement or final judgment.
4. Other insurance: primary, excess, contribution by equal shares or by limits.
5. Premium audit: advance premium (often on payroll or gross sales) is a deposit adjusted to actual exposure.
6. Representations: the declarations are accurate and complete and the policy is issued in reliance on them.
7. Separation of insureds.
8. Transfer of rights of recovery (subrogation).
9. When we do not renew: at least 30 days' written notice before expiration.

Claims-made form (CG 00 02)

Covers claims first made during the policy period for injury that occurred on or after the retroactive date. An extended reporting period allows reporting after the policy ends; it does not extend the policy period. Under ISO's claims-made endorsement CG 04 73, the right to buy the tail arises when the coverage is canceled, nonrenewed, or replaced with a later retroactive date or with insurance not written on a claims-made basis; the five-year tail must be requested in writing within 60 days after the policy ends and costs no more than 100% of the endorsement's annual premium. Switching from claims-made to occurrence without a tail leaves a gap.

Common endorsements and related forms

• Additional insureds: landlords, general contractors and vendors. CG 20 10 (owners, lessees or contractors, ongoing operations), CG 20 37 (completed operations), CG 20 33 (automatic status when a written contract requires it; ends when the operations for that party are completed), CG 20 15 (vendors, for injury arising from the scheduled products they sell).
• CG 21 47 Employment-Related Practices Exclusion (wrongful termination, harassment; buy EPLI).
• CG 24 04 Waiver of Transfer of Rights of Recovery: applies only to the extent the insured waived its rights before the loss.
• CG 25 03 Designated Construction Project General Aggregate: each project gets its own aggregate.
• CG 21 44 Limitation to designated premises or project.
• CG 24 26 Amendment of Insured Contract Definition: assumed tort liability covered only if the named insured caused the injury in whole or in part.
• CG 21 09 Unmanned Aircraft exclusion (drones, owned or not).
• CG 21 31 excludes a contractor's operations at a project covered by an owner-sponsored wrap-up program.
• A professional services exclusion is common; professional liability is bought separately.
• Owners and Contractors Protective (CG 00 09): bought by the contractor, with the project owner as named insured, for liability from the contractor's work.
• Railroad Protective (CG 00 35): the railroad is named insured when a contractor works on or near railroad property.
• Products/Completed Operations Liability (CG 00 37): only that hazard, for a manufacturer that needs nothing else.
• Liquor Liability (CG 00 33).

Common traps

• Coverage A is triggered by an occurrence; Coverage B by an offense.
• The each occurrence limit covers A and C together; the general aggregate covers A (not products-completed operations), B and C.
• Medical payments: one year to incur and report; no products-completed operations; no athletes.
• Defense is outside the limits but stops when the limit is exhausted.
• Damage to your work in completed operations is excluded unless a subcontractor did the work.
• A sole proprietor's CGL covers the business only.
• Liquor exclusion applies only to businesses in the alcohol business.