The Commercial General Liability policy is the workhorse third-party liability contract for commercial risks. It is structured around three coverage parts.
- Coverage A, Bodily Injury and Property Damage Liability. Pays amounts the insured becomes legally obligated to pay because of bodily injury or property damage caused by an occurrence in the coverage territory during the policy period. Includes premises liability, products liability, and completed-operations liability (work the insured has finished that later causes injury or damage).
- Coverage B, Personal Injury and Advertising Injury Liability. Pays for specified non-physical harms: false arrest, malicious prosecution, libel, slander, copyright/trade-dress infringement in advertising. A narrowly defined list, not a general "feelings hurt" policy.
- Coverage C, Medical Payments. Small no-fault payments to third parties injured on the insured's premises or by the insured's operations, regardless of the insured's legal liability. Designed to settle minor injuries early.
The insurer has a duty to defend any suit seeking damages within the coverage, even if the suit is groundless. Defence costs are typically in addition to the policy limit under most Canadian CGL forms, although some manuscripts erode the limit by defence. Read the declarations.
Common mistake: thinking CGL covers professional services. It does not. Coverage A applies to bodily injury and property damage; an accountant's negligent advice that costs a client money is a professional liability (E&O) exposure, not a CGL one.
⚠️ Trap: "Personal injury" in Coverage B is a narrow legal term of art (defined offences). It is not the popular meaning of "bodily injury". The exam tests this distinction often.
Recall: What does CGL Coverage B cover that Coverage A does not? Are defence costs typically inside or outside the CGL policy limit under standard Canadian forms?