Commercial General Liability (CGL) Insurance

Commercial General Liability (CGL) Insurance is the standard liability insurance policy for businesses. CGL provides coverage for bodily injury, property damage, personal and advertising injury, and medical payments arising from the insured's business operations, premises, and products. Most commercial entities carry CGL as foundational risk protection, often layered with excess and umbrella coverage for higher limits. The standard ISO Commercial General Liability Coverage Form (CG 00 01) is the industry baseline.

Coverage structure

Standard CGL provides three principal coverages: (1) Coverage A, Bodily Injury and Property Damage Liability: covers liability for "bodily injury" or "property damage" caused by an "occurrence" during the policy period; (2) Coverage B, Personal and Advertising Injury Liability: covers liability for false arrest, malicious prosecution, libel/slander, infringement of copyright/title/slogan, etc.; (3) Coverage C, Medical Payments: provides medical expense payments without regard to fault for injuries occurring on premises or arising from operations. Each coverage has its own insuring agreement, exclusions, and conditions.

The "occurrence" requirement

Coverage A requires an "occurrence," defined in the standard form as an "accident, including continuous or repeated exposure to substantially the same general harmful conditions." Texas courts have interpreted "occurrence" expansively. Lamar Homes v. Mid-Continent (Tex. 2007) held that defective construction can constitute an occurrence, resolving a split among Texas courts of appeals on whether defective construction could be an occurrence. The decision broadened CGL coverage substantially in the construction industry. Don's Building Supply (Tex. 2008) rejected the manifestation rule and held that property damage occurs when actual physical damage takes place. U.S. Metals (Tex. 2015) held that installing a defective product into other property does not, by itself, physically injure that property.

Common exclusions

The standard CGL form contains numerous exclusions: (1) expected or intended injury, injury the insured expected or intended; (2) contractual liability, liability assumed by contract, with significant exceptions for "insured contracts" (which reach tort liability for bodily injury or property damage assumed under a contract); (3) liquor liability; (4) workers' compensation and employer's liability; (5) employee bodily injury; (6) pollution; (7) aircraft, auto, watercraft; (8) mobile equipment; (9) war; (10) damage to property in the insured's care, custody, or control; (11) damage to your product; (12) damage to your work; (13) damage to impaired property; (14) recall of products, work, or impaired property. Each exclusion has a specific scope; coverage analysis often turns on whether an exclusion applies.

The "insured contract" exception

The contractual liability exclusion (Exclusion B in Coverage A) excludes liability assumed by contract, but with a critical exception for "insured contracts." Insured contracts include leases of premises (with exceptions), sidetrack agreements, easement or license agreements (with exceptions), obligations required by ordinance to indemnify a municipality (except in connection with work for a municipality), elevator maintenance agreements and, broadest of all, "any other contract or agreement pertaining to your business" under which the insured assumes the tort liability of another. The exception reaches only the insured's assumption of another party's tort liability for bodily injury or property damage to a third person, so an indemnity clause is covered to that extent and no further.

Texas-specific construction defect doctrine

Lamar Homes v. Mid-Continent established that construction defects can be "occurrences" supporting coverage. The decision (and its progeny) addresses subcontractor work, faulty materials, and resulting damage to other property. Coverage typically extends to (1) damage to non-defective property caused by the defective work; (2) bodily injury arising from the defects. Coverage typically does NOT extend to (3) the cost of repair or replacement of the defective work itself (the "your work" exclusion), though subcontractor exception expands coverage in some contexts.

Defense duty

The CGL insurer has a duty to defend any suit alleging facts that potentially fall within coverage, known as the "eight-corners rule" (comparing the four corners of the petition to the four corners of the policy). The duty to defend is broader than the duty to indemnify. If even one allegation in the petition states a potentially-covered claim, the insurer must defend the entire suit. Insurers typically defend under reservation of rights, preserving coverage defenses for the indemnification phase. See Reservation of Rights.

Limits structure

Standard CGL limits include: (1) per-occurrence limit, maximum payable for any single occurrence; (2) general aggregate limit, maximum payable for all occurrences in the policy period (other than products-completed operations); (3) products-completed operations aggregate limit, separate aggregate for products and completed operations claims; (4) personal and advertising injury limit, typically equal to per-occurrence; (5) medical payments limit, usually a small sublimit ($5,000-$10,000 per person). Common limit structures: $1M/$2M (per-occurrence/aggregate), $2M/$4M, $5M/$10M for larger operations. Excess and umbrella coverage layers above CGL for higher limits.