Casualty and Liability Insurance
Liability fundamentals
The commercial general liability (CGL) form promises to pay sums the insured becomes legally obligated to pay as damages because of bodily injury or property damage caused by an occurrence - an accident, including continuous or repeated exposure to substantially the same general harmful conditions. Coverage B adds personal and advertising injury (libel, slander, invasion of privacy, wrongful eviction, infringement in advertising), and Coverage C adds medical payments regardless of fault.
Occurrence forms respond when injury happens; claims-made forms respond when a claim is made, within the retroactive date and any extended reporting period. Trigger theories - exposure, manifestation, injury-in-fact, continuous - decide which of several policies pays long-tail claims.
Standard exclusions to know: expected or intended injury; your work and your product; impaired property; contractual liability; insured versus insured; employment-related injury (workers' compensation exclusive remedy); pollution; and damage to property in the insured's care, custody, or control. Umbrella and excess policies sit above scheduled underlying coverage; a true umbrella can drop down to fill gaps but usually only after a self-insured retention is exhausted.
Traps
- Treating a demand letter as a suit - the duty to defend attaches to suits seeking covered damages.
- Assuming punitive damages are insurable; many states limit or bar coverage.
- Ignoring that the insurer's defense obligation can exceed the policy limit in cost.
- Applying the wrong trigger to a progressive-damage claim.
Rule of thumb
Defense is broader than indemnity: if one covered claim among several could be covered, defend under a reservation of rights and bill the uncovered portion where permitted.