The CGL Policy, Decoded
Commercial General Liability is the first policy most businesses buy and the one you'll touch most often. This module teaches you to read the ISO CG 00 01 the way working underwriters, brokers, and claims professionals actually use it.
What you'll work through
Each chapter mixes short reads, real-world claim scenarios, and quick knowledge checks. Jump around freely — the glossary is always one click away.
How to use this module
Work in order the first time through — each chapter builds on the last. Dotted-underlined terms open the glossary. Your progress lives in this browser tab; if you close or refresh the page, use the chapter menu to jump back to where you left off.
Why CGL Is the Policy That Matters Most
Before you can decode the form, you need to know what job it was hired to do — and what jobs it deliberately refuses.
The first policy almost every business buys
A landscaper's mower flings a rock through a windshield. A customer slips on a wet café floor. A contractor's finished deck collapses a year later and breaks someone's ankle. None of these are exotic risks — they're the ordinary hazards of simply operating. That's what Commercial General Liability covers: the business's legal responsibility when its operations, premises, products, or completed work accidentally injure other people or damage their property.
- It's usually the first line of coverage a business purchases — landlords, customers, and contract partners demand proof of it before they'll do business with you.
- It covers risks common to nearly every business, regardless of industry.
- Most businesses couldn't stay in business without it. One uninsured serious injury claim can end a small company.
The one-sentence version
CGL protects a business against the unpredictable liabilities that come from accidentally injuring other people or damaging their property. It is broad — but not unlimited. It was never designed to cover every risk of running a business.
Broad in scope — but not a catch-all
New professionals get burned by assuming "general" means "everything." It doesn't. CGL deliberately excludes risks that belong to other policies (auto, workers' comp, professional liability) and risks the industry considers uninsurable business risk (doing bad work, intentionally harming someone). You'll spend all of Chapter 4 on exactly where those lines sit.
A plumbing contractor finishes a bathroom remodel. Two weeks later, a fitting she installed fails and floods the homeowner's hardwood floors downstairs.
Does her CGL respond to the homeowner's water-damage claim?
Damage to the homeowner's property (the floors) caused by the contractor's completed work is exactly the kind of third-party property damage CGL exists for. Note the nuance you'll learn in Chapter 4: the cost to redo her own faulty fitting is typically excluded ("damage to your work") — but the damage her work caused to other property is the covered part.
Standard forms vs. manuscript forms
Insurance contracts come in two flavors, and knowing which one you're holding changes how you read it:
| Type | What it is | Why it matters to you |
|---|---|---|
| Standard ("bureau") forms | Drafted by industry organizations — chiefly ISO (Insurance Services Office) and AAIS — and used by their member and subscriber insurers. | The language is uniform and heavily litigated, so decades of court decisions tell you fairly reliably how it will be interpreted. |
| Non-standard ("manuscript") forms | Custom or insurer-proprietary wording, used when standard forms don't fit the risk. | Every word must be read fresh. Never assume a manuscript form matches the ISO form it resembles — the differences are usually the point. |
Either kind can be written on an admitted or non-admitted (surplus lines) basis — that's a licensing and regulatory distinction, separate from the form itself.
Meet the star of this module: ISO CG 00 01
The most widely used CGL form in the United States is ISO form CG 00 01 — you'll most often see the 04 13 edition (April 2013). Learn this one form well and you've learned the skeleton of nearly every CGL policy you'll ever touch, because most proprietary and manuscript forms are built on it.
Field note: reading a form number
CG 00 01 04 13 breaks apart as: CG = commercial general liability line · 00 01 = the coverage form itself · 04 13 = edition date, April 2013. Endorsements follow the same pattern (e.g., CG 20 10), so the number instantly tells you what kind of document you're holding — and whether two parties are even talking about the same edition.
One more fact to file away now: the CG 00 01 is an occurrence-trigger form. Coverage is triggered when the injury or damage happens during the policy period — no matter when the claim is eventually made, even years later. (Some other liability policies work on a "claims-made" trigger instead; when you meet one, read it carefully — the difference is enormous.)
Anatomy of a CGL Policy
A CGL "policy" isn't one document — it's a small stack of documents that only mean something read together. Here's the stack, top to bottom.
The three-layer stack
Tap each layer to open it:
Watch out
Never quote coverage from the form alone. The blandest-looking endorsement on the schedule — a classification limitation, an assault-and-battery exclusion — can hollow out coverage the form appears to grant. Read the dec page's form schedule first, then the endorsements, then the form.
The five sections of the CG 00 01
The form is organized into five sections. Get this map into your head and you can find anything:
Section I — Coverages. The promises. Three separate insuring agreements (Coverages A, B, and C — chapters 3 and 5), each followed by its own exclusions, plus Supplementary Payments describing extras the insurer pays on top of limits, like defense-related expenses.
Section II — Who Is An Insured. Defines everyone entitled to coverage. Far more people than the named insured — details below.
Section III — Limits of Insurance. The machinery of how much: the aggregate limits, per-occurrence limit, and sublimits, and how they interact. Chapter 6 is devoted to it.
Section IV — Conditions. The rules of the relationship: the insured's duties when something happens (prompt notice, cooperation, no voluntary payments), how the policy coordinates with other insurance (primary vs. excess), premium audit, subrogation (transfer of rights of recovery), and more. Claims live and die in this section — it powers Chapter 8.
Section V — Definitions. The decoder ring. Any word in quotation marks in the form — "occurrence," "bodily injury," "your work" — is a defined term whose meaning is fixed by this section, not by the dictionary. Rule one of policy reading: when you hit a quoted term, stop and read its definition.
Who is an insured? (More people than you think)
Section II automatically extends insured status well beyond the business named on the dec page:
- The named insured itself — and depending on entity type: a sole proprietor and spouse; a partnership's partners and their spouses; an LLC's members and managers; a corporation's directors, officers, and stockholders — each only with respect to duties in that role or liability as such.
- Employees and volunteer workers — for acts within the scope of their employment or duties (with carve-outs, e.g., injury to a co-employee, or professional health care services).
- Newly acquired or formed organizations — automatically, but only until the 90th day after acquisition or the end of the policy period, whichever comes first, and with no coverage for injury that happened before the acquisition.
- Real estate managers and, in limited respects, legal representatives after a death.
Separation of insureds
A quietly powerful condition: the policy applies as if each insured were the only insured. So one insured suing another, or one insured's knowledge or misconduct, doesn't automatically strip coverage from the innocent others. (The Limits of Insurance are the exception — they're shared by everyone.)
Mid-term, your insured — a growing HVAC company — buys a small competitor and folds it in as a subsidiary. Forty days later, the subsidiary's tech accidentally starts a fire in a customer's attic. Nobody ever told the carrier about the acquisition.
Is the new subsidiary an insured for this loss?
Section II grants newly acquired organizations automatic insured status for up to 90 days. Day 40 is inside the window, so this loss is in. But at day 91 the free coverage evaporates — the broker's job is to formally add the subsidiary (and get it underwritten) before the clock runs out. Also note: if the fire had occurred before the acquisition, no coverage — the automatic grant never reaches backward.
Coverage A: Bodily Injury & Property Damage
Coverage A is the heart of the policy — the promise that pays when the business accidentally hurts someone or damages their property. Let's read the actual promise, word by word.
First, the map: three coverages, three promises
The workhorse. This chapter and the next.
Reputation-and-rights offenses. Chapter 5.
Small, fast, no-fault goodwill payments. Chapter 5.
Each coverage part has its own insuring agreement and its own exclusions. A claim that fails under one may still succeed under another — always check all three.
Read the real thing
Below is the Coverage A insuring agreement, condensed to its operative sentence. Every highlighted phrase is load-bearing. Tap each one to decode it:
The five-question coverage test
Every Coverage A claim is these five questions: (1) Is the claimant seeking damages the insured is legally obligated to pay? (2) Is it "bodily injury" or "property damage" as defined? (3) Was it caused by an "occurrence" — an accident? (4) In the "coverage territory"? (5) During the policy period? Only then do you move to the exclusions.
When did the injury "occur"? The Montrose provision
For injuries that develop over time — mold, leaks, chemical exposure — which policy year is on the hook? After litigation (notably the Montrose case), ISO added the continuous injury / known-loss provisions, and they work like this:
- Coverage applies only if no insured knew, before the policy period began, that the injury or damage had already started.
- If an insured knew about ongoing injury before the policy incepted, that injury — including its continuation or resumption — is deemed known, and this policy doesn't cover it.
- You "know" about injury at the earliest of: reporting it to any insurer, receiving a demand about it, or becoming aware by any means that it has begun.
Translation: you can't buy fresh insurance for a fire that's already burning. The policy on the risk when damage first became known keeps the claim; later policies are off the hook.
A property manager discovers in March that a pipe in a client's building has been slowly leaking into a tenant's suite. In May, the manager's business switches CGL carriers. In August, the tenant sues over the (still worsening) damage. The manager tenders the claim to the new carrier.
Does the new policy respond?
The insured knew in March that property damage had begun. Under the Montrose provision, the continuation of that damage is deemed known before the new policy's inception — so the new policy never attaches. The claim belongs to the carrier whose policy was in force when the damage first became known. This is also why carriers ask about known incidents on applications.
A frustrated bar owner physically throws a rowdy patron out the door. The patron breaks his wrist and sues. The bar's CGL carrier receives the suit.
Is there an "occurrence"?
An "occurrence" means an accident. Intentionally throwing someone is hard to call accidental, and even if a court found an occurrence, the expected-or-intended-injury exclusion (next chapter) would likely apply. Real-world wrinkle: the duty to defend may still be triggered if the complaint pleads negligence (e.g., "negligent security"), which is exactly why bars often buy a separate assault-and-battery coverage — and why many carriers attach A&B exclusions.
Coverage A Exclusions: Where the Lines Are
The insuring agreement giveth; the exclusions taketh away — but not randomly. Nearly every exclusion exists for one of two logical reasons. Learn the two reasons and the list stops being a memorization chore.
The two-bucket rule
Insurers generally won't cover a risk under CGL when either:
🏠 It's insured elsewhere
The risk belongs to a different, purpose-built policy. Covering it here would duplicate coverage and double-charge premium. The exclusion is a signpost: "buy the right policy."
⚖️ It's uninsurable business risk
Intentional harm, contractual promises, the cost of your own shoddy work. Insuring these would invite moral hazard — paying businesses to behave badly or build sloppily. The exclusion is a boundary: "this risk is yours to manage."
The exclusions quick-map
All the major Coverage A exclusions, filterable by bucket. Tap any card for the plain-English version and where the coverage actually lives:
Field note: the "business risk" trio
Exclusions k (your product), l (your work), and n (recall) draw the most important line in contractor and product accounts: CGL pays for the damage your bad work causes to other people and their property — not the cost of redoing the bad work itself. The deck collapse pays for the broken ankle and the neighbor's crushed grill; rebuilding the deck is on the contractor. Note the key carve-back in exclusion l: it doesn't apply to completed work performed by a subcontractor — a huge issue for general contractors.
Your insured, a cabinet maker, installs a full kitchen. A month later a badly-mounted cabinet falls, shattering the client's stone countertop and injuring the client's arm. The client demands: (1) medical costs, (2) a new countertop, (3) re-installation of the cabinet properly.
What does Coverage A pay?
The bodily injury (arm) and the resulting damage to other property (countertop) are covered — that's the core promise. But re-doing the insured's own defective installation is "damage to your work" (exclusion l) — a cost of doing business, not an insurable fortuity. If the cabinet had been installed by a subcontractor, the carve-back could change the answer on item 3.
An employee of your insured slips in the warehouse and breaks a hip. She files suit against her employer for her injuries.
Does the employer's CGL defend and pay?
Injuries to the insured's own employees arising out of employment are excluded (exclusions d and e) because they belong to workers' compensation and employers liability coverage — purpose-built systems with their own rules. CGL is for injuries to third parties. This is the cleanest illustration of the "insured elsewhere" bucket.
Coverages B & C: The Other Two Promises
Coverage B protects against a list of reputation-and-rights offenses. Coverage C is a small, fast goodwill fund. Both punch above their weight in real claims.
Coverage B: Personal and Advertising Injury
Coverage B pays damages the insured is legally obligated to pay because of "personal and advertising injury" — caused by an offense arising out of the insured's business and committed in the coverage territory. The insurer has the same right and duty to defend.
The big structural difference
Coverage A requires an "occurrence" — an accident. Coverage B requires an offense from a defined list — and most of the listed offenses are intentional acts (you meant to publish the ad; you meant to evict the tenant). What makes them insurable is that the harm was unintended, not the act. Different trigger, different logic.
The seven offenses — the complete list
"Personal and advertising injury" means injury (including consequential bodily injury) arising out of one or more of these, and only these:
- a. False arrest, detention, or imprisonment — the store detains a suspected shoplifter who turns out to be innocent.
- b. Malicious prosecution — wrongfully instigating legal proceedings against someone.
- c. Wrongful eviction, wrongful entry, or invasion of the right of private occupancy — committed by or for the owner, landlord, or lessor.
- d. Slander, libel, or disparagement — oral or written publication that defames a person or organization or disparages their goods, products, or services.
- e. Violation of the right of privacy — oral or written publication of material that violates a person's privacy.
- f. Using another's advertising idea in your "advertisement."
- g. Infringing another's copyright, trade dress, or slogan in your "advertisement."
If the claim doesn't fit an enumerated offense, there is no Coverage B — full stop. (And note what's not on the list: patent infringement, trademark infringement outside an advertisement, discrimination.)
A gym posts a comparison ad claiming a rival gym's equipment is "ancient, unsanitary, and probably a lawsuit waiting to happen." The rival sues for disparagement and lost members.
Coverage B?
Publishing material that disparages another organization's goods or services is squarely offense (d). The act was intentional, but that's how Coverage B works — the offense list, not "accident," defines the trigger. Watch for the knowing-falsity exclusion, though: if the insured published knowing it was false, coverage collapses. Coverage B protects the careless publisher, not the deliberate liar.
Coverage C: Medical Payments
Coverage C pays medical and funeral expenses — up to a small limit, typically $5,000 per person — for people injured in accidents on or next to the insured's premises or arising from the insured's ongoing operations. Expenses must be incurred and reported within one year of the accident.
- No fault required. It pays regardless of whether the insured is legally liable — that's the whole point.
- It's goodwill money. Paying an injured customer's ER bill promptly often prevents a small incident from becoming a large liability lawsuit.
- It's not for insiders. No payments to the named insured, employees (workers' comp territory), tenants of the insured, or anyone injured while participating in athletics, among other carve-outs.
A customer trips over a floor mat in your insured's boutique and sprains her wrist — $900 in urgent-care bills. She's friendly about it and hasn't hired a lawyer or claimed the store did anything wrong.
Can the insurer just pay the $900?
Accident on the premises, medical expenses within a year, no liability determination needed. The insurer can pay promptly under Medical Payments. A $900 goodwill payment today routinely prevents a $50,000 Coverage A claim next year — which is why adjusters call med pay the cheapest claim dollars in insurance.
Limits of Insurance: How Much, and How It Runs Out
Section III is the policy's arithmetic — six numbers on the dec page and the rules for how claims consume them. Watch them erode in real time below.
The six numbers on a typical dec page
| Limit | Typical amount | What it caps |
|---|---|---|
| Each Occurrence | $1,000,000 | The most paid for Coverage A damages + Coverage C medical expenses arising from any one "occurrence." |
| General Aggregate | $2,000,000 | The most paid in the policy period for everything except products-completed operations: Coverage A (premises/ongoing ops), Coverage B, and Coverage C combined. |
| Products-Completed Ops Aggregate | $2,000,000 | A separate annual pot for injuries from your products and completed work. |
| Personal & Advertising Injury | $1,000,000 | The most for Coverage B per person or organization — subject to the General Aggregate. |
| Damage to Premises Rented to You | $50,000–$100,000 | Per-premises sublimit for damage to space you rent or temporarily occupy (fire legal liability's descendant) — subject to the Each Occurrence limit. |
| Medical Expense | $5,000 | Per person for Coverage C — subject to the Each Occurrence limit. |
The limits apply regardless of how many insureds, claims, or claimants there are — one shared pool, not one pool per insured.
The limits tower — try to exhaust it
Here's a live policy: $1M per occurrence, $2M general aggregate, $2M products-completed ops aggregate. Feed it a year of claims and watch which pot each one drains:
General Aggregate — $2,000,000
Products-Completed Ops Aggregate — $2,000,000
Two aggregates, two doors
Notice in the simulator: premises and ongoing-operations claims drain the General Aggregate; product and completed-work claims drain the Products-Completed Ops Aggregate. A contractor can exhaust one pot while the other sits untouched. Classifying a claim into the right pot is a real (and sometimes contested) coverage decision.
Do defense costs erode the limits?
Under the standard CG 00 01: no. The duty to defend is an express grant in addition to the limits — defense costs appear nowhere in Section III. The insurer could spend $700,000 on lawyers and the full $1M occurrence limit still remains for damages. Two crucial caveats:
- The defense obligation ends when the applicable limit is exhausted by paying judgments, settlements, or medical expenses. An exhausted policy stops defending.
- Many non-standard forms put defense inside the limits ("defense within limits" / "burning limits" policies — common in E&S and professional lines). Spot this instantly when comparing quotes: a $1M burning-limits policy is materially less coverage than a $1M CG 00 01.
Limits reset each year — with one trap
The limits apply separately to each consecutive annual period. A multi-year policy refreshes its aggregates every 12 months. The trap: if the policy period is extended after issuance for less than 12 months (a "stub" extension), that extra stretch is treated as part of the last annual period — no fresh limits. An insured running low on aggregate gets no relief from a short extension.
The Endorsements Everyone Argues About
In daily practice, more negotiation happens over three endorsement types than over the form itself. Master these and you can hold your own in almost any contract-insurance conversation.
1. Additional insured (AI) endorsements
Business contracts constantly require one party to add the other to its CGL: the landlord onto the tenant's policy, the project owner and GC onto the subcontractor's. An AI endorsement grants the added party insured status — its own defense and indemnity under the named insured's policy, typically for liability arising out of the named insured's work or premises.
- Scheduled vs. blanket. Scheduled endorsements name the AI specifically; blanket ("automatic") AI endorsements grant status to any party the insured has agreed in a written contract to add. Blanket AI + a signed contract is the everyday machinery of commercial construction.
- Ongoing vs. completed operations — the classic trap. The most common AI endorsements (like ISO's CG 20 10) cover liability arising from ongoing operations only. Construction contracts usually demand completed-ops AI too, which takes a separate endorsement (like CG 20 37). A certificate showing "additional insured" tells you nothing about which one is attached.
- Scope limits. Modern AI endorsements only cover the AI to the extent the injury was caused at least in part by the named insured's acts, and no broader than the underlying contract requires.
The certificate is not the coverage
A certificate of insurance (COI) is an information snapshot, and it says so on its face: it confers no rights and amends no policy. Coverage lives in the endorsement attached to the policy — nowhere else. "But the certificate said…" is one of the most common, and most losing, arguments in insurance disputes. Verify the endorsement, not the certificate.
2. Waiver of subrogation
Subrogation: after paying a claim, the insurer steps into its insured's shoes to recover from whoever actually caused the loss. A waiver of subrogation endorsement (ISO CG 24 04) means the insurer agrees not to chase a particular party the insured has contractually agreed to protect.
Why it exists: contract partners (owner ↔ GC ↔ subs; landlord ↔ tenant) want disputes settled by each side's own insurance, without insurers re-litigating fault against each other afterward. The CG 00 01's transfer-of-rights condition already honors waivers the insured signed before the loss — but contracts demand the endorsement anyway for certainty, and carriers price for the recovery rights they're giving up.
3. Primary and non-contributory
When a loss hits both the AI's own policy and the named insured's policy (with the AI endorsement), whose policy pays first? The "other insurance" clauses would normally share the loss. A primary and non-contributory provision (e.g., ISO CG 20 01) settles the argument by contract:
- Primary — the named insured's policy pays first, not merely alongside.
- Non-contributory — it won't ask the AI's own insurance to chip in.
Requirement in virtually every construction contract you'll see: "CGL naming Owner and GC as additional insureds on a primary and non-contributory basis, with waiver of subrogation." You can now read that sentence like a professional: insured status + payment order + no recovery actions. Three endorsements, one sentence.
Endorsements that take coverage away
Remember the flip side: exclusionary endorsements are just as common — classification limitations (coverage only for the operations listed), assault-and-battery exclusions, habitational exclusions, contractor warranty endorsements, total pollution exclusions. The form schedule on the dec page is a reading list, and skipping it is malpractice.
A GC requires its drywall sub to add the GC as an additional insured. The sub's policy carries blanket AI endorsement CG 20 10 (ongoing operations). Eight months after the drywall work is finished and accepted, a ceiling section fails and injures the building owner's visitor, who sues the GC.
Does the sub's policy defend the GC as an additional insured?
CG 20 10 covers the GC for liability arising out of the sub's ongoing operations. The injury happened after the work was completed — that's the products-completed operations hazard, which needs CG 20 37 (or equivalent). If the contract required completed-ops AI and the sub's broker never attached it, the GC's claim bounces and the sub is likely in breach of contract. This exact gap drives an enormous share of construction-insurance litigation.
Life of a Claim: The Form in Motion
Everything you've learned converges the day something goes wrong. Walk the timeline of a real claim and see which policy provision drives each step.
The running example
The claim: Riverside Catering (CGL: $1M/$2M, standard CG 00 01) caters a wedding. Days later, fourteen guests are hospitalized with food-borne illness. Two months after that, an attorney's demand letter arrives seeking damages for all fourteen.
Tap each step to expand it:
The contaminated meal is the "occurrence" — continuous exposure of many guests to the same harmful condition is one occurrence, not fourteen. The policy in force on the date of injury owns this claim (occurrence trigger — Chapter 1), no matter when suit is eventually filed.
The Conditions require the insured to notify the carrier "as soon as practicable" of an occurrence that may result in a claim — how, when, where, who was injured. When the demand letter arrives, every demand and legal paper must be forwarded immediately. Two more duties with teeth:
- Cooperate with the investigation, settlement, and defense.
- No voluntary payments — the owner who quietly offers guests cash "to make it right" is making uncovered gifts and jeopardizing coverage (except plain first aid, which is allowed).
Late notice that prejudices the insurer is a classic way good claims go bad.
The adjuster runs the five-question test (Chapter 3), checks exclusions (Chapter 4), and pulls the dec page's endorsement schedule (Chapters 2, 7). Coverage questions here? The carrier defends under a reservation of rights letter: "we'll defend now, but reserve the right to deny indemnity if facts show no coverage." It protects the insured's defense today and the insurer's position tomorrow — read every ROR letter carefully.
Suit is filed; the insurer appoints and pays defense counsel — the duty to defend as an express coverage grant. Defense costs are outside the limits on this form (Chapter 6), so months of litigation don't shrink the $1M available for the guests. The insurer also may investigate and settle at its discretion — the settle-or-fight decision belongs to the carrier under the standard form.
The fourteen claims settle for $1.15M total. One occurrence → the $1M each-occurrence limit caps the insurer's payment; Riverside funds the remaining $150K itself (this is why umbrella policies exist). The $1M also erodes the aggregate. Had settlements exhausted the applicable limits entirely, the duty to defend any remaining suits would end — an exhausted policy is a closed wallet, and payment of the limit plus a release ends the insurer's obligations.
Investigation shows a supplier delivered the tainted ingredient. Under transfer of rights of recovery, the insurer subrogates against the supplier to recoup its payment (unless a pre-loss waiver applied — Chapter 7). At renewal, underwriting re-prices the account with a $1M loss on the record: higher premium, food-safety requirements, maybe a higher deductible. Claims history is the underwriter's memory.
The whole module in one claim
Notice what just happened: the trigger (Ch. 1), the document stack (Ch. 2), the insuring agreement test (Ch. 3), the exclusion check (Ch. 4), the limits math (Ch. 6), endorsement questions (Ch. 7), and the conditions machinery (Ch. 8) all fired on a single claim. That interlock is the CGL policy. Read one part in isolation and you'll get real claims wrong.
Prove It: The Final Check
Fifteen questions across everything you've covered. Answer them all; you'll get a score, a topic-by-topic readout, and pointers on what to revisit.
Results
Where you're strong — and what to revisit
The eight ideas to carry with you
Keep going
- Browse the glossary (button in the sidebar) — it's built to be a desk reference after the module ends.
- Re-run any chapter from the menu; the scenarios reset every time you reload.
- Get the industry-standard reference: Commercial General Liability Coverage Guide (Malecki & Thamann, The National Underwriter Company) — the book working coverage professionals keep at arm's reach.
- Read a real CG 00 01 04 13 end to end with this module open beside it. It will take an hour and put you ahead of most people who've worked in the industry for years.