I wanted to spend a bit of time today talking about the most important coverage section in CGL insurance (part of the CAIB 3 course curriculum).
Coverage (Insuring) Agreement:
In general, CGL Coverage A pays compensatory damages to insureds when they are found liable for causing bodily injury or property damage.
Now, there are 4 parts of pay attention to here: compensatory damage only – when found liable – and for bodily injury and property damage only.
This means that the insurer will only pay for damages awarded by courts intended to compensate the wronged party. This could include medical bills, pain and suffering, etc; but would exclude things like fines or other punitive damages.
When Found Legally Liable:
Insurance only pays when you have lost the legal battle and the courts have found you legally liable for the damage. Your CGL policy will not respond just because the insured feels guilty or personally responsible for the damage.
Bodily injury, in an insurance context, covers injury from both external (ie. regular injury) or internal (ie. sickness/disease) causes as well as resulting death.
In CGL Coverage A, only damage to tangible property (property that can be felt or touched) is covered. This excludes loss of data or other forms of intangible property. However, loss of use damages such as loss of income or increased expenses is covered.
This is just a quick run-down of the insuring agreement found in CGL Coverage A and is by no means an exhaustive explanation of CGL Coverage A. For that, you will need to refer to the notes and lectures found in our online CAIB 3 course.