A CGL insurer defending a lawsuit has paid settlements that use up the applicable each occurrence limit. What happens to its duty to defend?

It ends because the limit is used up

It passes to the insured as a supplementary payment

It continues until the suit is resolved

It continues, with costs charged to the aggregate

Under the CGL, an occurrence is defined as:

An accident, including repeated exposure to harmful conditions

An offense committed by the insured in the course of its business

A sudden event occurring at a single moment in time

Any act of the insured causing injury, intended or not

A contractor had an occurrence CGL with Insurer A in 2024 and switched to Insurer B in 2025. Work done in 2024 causes injury in 2024, but the claim is not made until 2026. Which policy responds?

Neither, because the claim came after both policies

Both, sharing the loss pro rata

Which person is NOT eligible for payment under CGL Coverage C (medical payments)?

An employee injured on the premises

A visitor attending an event on the premises

A passerby hit by the insured's falling sign

A customer who trips in a store aisle

A business owner, knowing a statement is false, tells customers that a competitor is about to go bankrupt. The competitor sues for slander. How does the owner's CGL respond?

Excluded, since it was made knowing it was false

It is covered under Coverage A as property damage

It is covered, because oral statements are not excluded

It is covered under Coverage B as slander

A CGL policy is written for a three-year term. How do its aggregate limits apply?

Separately to each annual period

Once for the entire three-year term

A plumber's employee floods a customer's kitchen while installing a sink. Two weeks after the job is finished, a joint he installed fails and floods the basement. How are the two losses classified under the CGL?

Operations, then completed operations

Completed operations, then operations

Products-completed operations, both

A general contractor finishes a house. Faulty wiring installed by a subcontractor later causes a fire that damages the house. How does the general contractor's CGL treat the damage to the house?

It is covered, because a subcontractor did the damaged work

It is excluded under the impaired property exclusion

It is excluded under the 'your work' exclusion

It is covered only if the fire occurred during construction

Mickey's Diner uses a rival's slogan, "Eat More Beef," in its newspaper ads, and the rival sues for its lost business. Which part of Mickey's CGL responds?

Coverage B – Personal and Advertising Injury

Coverage A – Bodily Injury and Property Damage

Coverage C – Medical Payments

The products-completed operations hazard

Coverage partCommercial lines

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Drill18 items

Commercial general liability on the P&C exam

Commercial general liability insurance is the ISO CGL coverage form, written on an occurrence basis (CG 00 01 04 13) or a claims-made basis (CG 00 02 04 13). Underneath both versions sit three coverages with three different triggers, six separate limits, and a list of exclusions whose exceptions carry as much weight as the exclusions themselves.

Coverage A needs an occurrence, Coverage B needs an offense, Coverage C needs an accident and no fault at all. The trigger, in turn, decides which limit pays.
The CGL sorting rule

Coverages A, B and C side by side

CGL coverage form, ISO 04 13 edition. Insurers can modify the form by endorsement.
Coverage	Trigger	Pays for	Never pays
A: bodily injury and property damage	Occurrence (an accident, including repeated exposure)	Damages the insured is legally obligated to pay	Expected or intended injury, pollution, owned autos, the insured's own product
B: personal and advertising injury	Offense committed in the coverage territory	False arrest, malicious prosecution, wrongful eviction, libel and slander, privacy violations, infringement in the insured's own ad	Knowing violations, criminal acts, breach of contract
C: medical payments	Accident on the premises or from operations	Medical expenses incurred and reported within one year, regardless of fault	Any insured, people eligible for workers comp, athletes in a game, products-completed operations

Limits, insureds and the exclusions that matter

The declarations carry six limits, and each draws on a different set of coverages. The general aggregate caps A, B and C combined, except products-completed operations, which has its own products-completed operations aggregate. Personal and advertising injury is a per-person-or-organization limit. Damage to premises rented to you covers fire damage to rented premises and, for rentals of seven consecutive days or less, any peril. Medical expense is per person. The each occurrence limit sits inside the aggregates.

Defense costs are paid in addition to the limits, along with the other supplementary payments: up to $250 for bail bonds and up to $250 a day for the insured's lost earnings while helping with the defense. Defense never erodes the CGL limits.

Who is an insured

It depends on the entity. A sole proprietor and spouse are insureds for the business only; partners and their spouses for the conduct of the partnership; LLC members and managers; a corporation's executive officers and directors in those roles and its stockholders as stockholders. Employees and volunteer workers are insureds, but not for injury to a co-employee. A newly acquired organization is covered for 90 days or until the policy ends.

Exclusions with exceptions

Two Coverage A exclusions carry exceptions worth knowing exactly. The liquor liability exclusion applies only to insureds in the business of making, selling, serving or furnishing alcohol, so a company that serves wine at its holiday party keeps coverage. The aircraft, auto and watercraft exclusion gives back parking autos on or next to the premises and non-owned watercraft under 26 feet; auto liability for owned and hired vehicles belongs to commercial auto. Injury to employees is excluded twice, under the workers compensation and employer's liability exclusions, and lands on workers compensation instead.

The underlying negligence, damages and duty-to-defend rules are on liability insurance basics.

When a claims-made CGL responds

CG 00 02: the injury must happen on or after the retroactive date and before the policy ends, and the claim must be first made during the policy period or an extended reporting period.

Test yourself on the CGL

0 of 18 answered · 0 right

The set below covers all three coverages, the limits, who counts as an insured and both triggers. The A/B/C table and the claims-made timeline above carry the rules you need.

Notes on each optionCommit to an answer first. The notes under the item then open on every option: what rules it in or out, and the one word that splits the runner-up from the key.

Item 01
A CGL insurer defending a lawsuit has paid settlements that use up the applicable each occurrence limit. What happens to its duty to defend?
1. ASupplementary payments are the insurer's defense costs, not something passed to the insured.
2. BThe duty to defend does not run to the end of the suit; the CGL ties it to the limit.
3. CDefense costs are paid in addition to the limits, never charged to the aggregate, and they stop once the limit is gone.
4. DCorrect: the CGL says the right and duty to defend end when the applicable limit has been used up paying judgments or settlements.
More notes ↓
Item 02
Under the CGL, an occurrence is defined as:
1. AAn offense is the trigger for Coverage B (personal and advertising injury), not the definition of an occurrence.
2. B'A single moment in time' is too narrow; the CGL definition expressly includes gradual exposure.
3. CIntended injury is excluded under Coverage A, so 'intended or not' overreaches.
4. DCorrect: the CGL defines an occurrence as an accident, including continuous or repeated exposure to substantially the same harmful conditions.
More notes ↓
Item 03
A contractor had an occurrence CGL with Insurer A in 2024 and switched to Insurer B in 2025. Work done in 2024 causes injury in 2024, but the claim is not made until 2026. Which policy responds?
1. AAn occurrence policy does not care when the claim is made, so a late claim does not leave the contractor uninsured.
2. BOnly one occurrence policy was in force when the injury happened, so there is nothing to share pro rata.
3. CCorrect: an occurrence policy covers injury that happens during its policy period, and the injury happened in 2024 under Insurer A.
4. DInsurer B's 2025 policy would matter only if the injury had occurred in 2025, or under claims-made logic.
More notes ↓
Item 04
Which person is NOT eligible for payment under CGL Coverage C (medical payments)?
1. AA visitor at an event on the premises is exactly the member of the public Coverage C is built for.
2. BA passerby hurt by the insured's falling sign is injured by its premises and qualifies for Coverage C.
3. CCorrect: Coverage C excludes employees, whose work injuries belong under workers compensation.
4. DA customer who trips in an aisle is exactly who Coverage C pays, regardless of fault.
More notes ↓
Item 05
A business owner, knowing a statement is false, tells customers that a competitor is about to go bankrupt. The competitor sues for slander. How does the owner's CGL respond?
1. ASlander is not physical damage to tangible property, so Coverage A does not apply.
2. BOral statements are not excluded as such, but statements made knowing they are false are.
3. CCorrect: slander is a Coverage B offense, but Coverage B excludes material published with knowledge of its falsity.
4. D'Covered as slander' ignores the knowing-falsity exclusion that removes this claim from Coverage B.
More notes ↓
Item 06
Under a CGL policy, the each occurrence limit is the most the insurer will pay for all damages from one occurrence under:
1. ACoverage B is not under the each occurrence limit; it has its own personal and advertising injury limit.
2. BThe each occurrence limit also caps Coverage C medical payments, not just Coverage A.
3. CCorrect: the each occurrence limit caps the combined payment under Coverage A and Coverage C for one occurrence.
4. DCoverage B has its own per-person or per-organization limit and sits outside the each occurrence limit.
More notes ↓
Item 07
A CGL policy is written for a three-year term. How do its aggregate limits apply?
1. ACorrect: CGL limits apply separately to each consecutive annual period, so the aggregates reset every year.
2. B'Per occurrence' describes the each occurrence limit, not how the aggregate applies.
3. CApplying the aggregate once for the whole three years is what the form specifically avoids by applying it to each annual period.
4. DAggregate limits are not per claimant; the CGL ties them to annual periods.
More notes ↓
Item 08
A plumber's employee floods a customer's kitchen while installing a sink. Two weeks after the job is finished, a joint he installed fails and floods the basement. How are the two losses classified under the CGL?
1. AThis reverses the order; the first flood happened while the work was still being done.
2. BOnly the second flood came after the job was finished, so both cannot be completed operations.
3. CCorrect: damage during the job is premises and operations, and damage after the work is completed falls in the completed operations hazard.
4. DThe second flood happened after the job was finished, which moves it out of premises and operations.
More notes ↓
Item 09
A general contractor finishes a house. Faulty wiring installed by a subcontractor later causes a fire that damages the house. How does the general contractor's CGL treat the damage to the house?
1. AImpaired property applies to property that is not physically injured, and the house burned.
2. BThe 'your work' exclusion does not apply when the damaged work or the work causing the damage was done by a subcontractor.
3. CCorrect: the subcontractor exception to the 'your work' exclusion restores coverage, since the faulty wiring was a sub's work.
4. DThe fire happened after the house was finished, and the subcontractor exception covers that completed operations loss.
More notes ↓
Item 10
Mickey's Diner uses a rival's slogan, "Eat More Beef," in its newspaper ads, and the rival sues for its lost business. Which part of Mickey's CGL responds?
1. ACoverage A needs bodily injury or physical damage to tangible property, and the rival suffered neither.
2. BCorrect: infringing another's slogan in the insured's advertisement is a listed advertising injury offense under Coverage B.
3. CCoverage C pays medical bills for injured members of the public, not lost business.
4. DThe products-completed operations hazard concerns injury from products or finished work, not an ad.
More notes ↓
Item 11
Solvent leaks from a dry cleaner's tank into groundwater under neighboring properties, and the neighbors sue. How does the dry cleaner's CGL respond?
1. APersonal and advertising injury covers listed offenses such as libel, not contamination.
2. BCorrect: the CGL pollution exclusion removes injury and damage from the release of pollutants at the insured's premises.
3. CThe groundwater damage is property damage, but the pollution exclusion takes it out of Coverage A.
4. DCoverage C pays medical expenses for bodily injury, not cleanup or property damage claims.
More notes ↓
Item 12
A forklift driven by a store employee in the store's warehouse injures a customer. Which policy is designed to cover the store's liability?
1. AThe business auto policy covers autos designed for public roads, and a forklift is mobile equipment, not an auto.
2. BThe CGL auto exclusion does not reach mobile equipment, so 'all motorized vehicles' overreaches.
3. CWorkers compensation covers the store's own injured employees, not an injured customer.
4. DCorrect: a forklift is mobile equipment, and the CGL auto exclusion does not apply to mobile equipment.
More notes ↓
Item 13
An employee rents a 20-foot boat to entertain clients and injures a swimmer. The swimmer sues the employer. How does the employer's CGL respond?
1. ACoverage C is not the only route; the boat fits the Coverage A watercraft exception.
2. BThe watercraft exclusion has an exception for non-owned boats under 26 feet not carrying people or property for a charge.
3. CCorrect: the boat is non-owned, under 26 feet and not carrying people for a charge, so the watercraft exception restores coverage.
4. DThis has it backward; an owned boat is excluded, and the exception covers non-owned boats.
More notes ↓
Item 14
A general contractor wants to be covered under a subcontractor's liability policy for claims arising out of the subcontractor's work. The contractor should be:
1. AThe first named insured is the policyholder who controls the policy and pays the premium, not a contractor added for one job.
2. BA loss payee has an interest in property claim payments, not liability coverage.
3. CCorrect: an additional insured endorsement extends the subcontractor's liability coverage to the contractor.
4. DA certificate of insurance only shows the policy exists; it grants no coverage.
More notes ↓
Item 15
Under the CGL coverage form, if the insurer decides not to renew, it must mail or deliver notice to the first named insured at least how many days before expiration?
1. A45 days is a near-miss number; the CGL nonrenewal condition says 30 days.
2. B10 days is the cancellation notice for nonpayment of premium, not the nonrenewal notice.
3. C60 days is not the CGL form figure (state law may require longer, but the form says 30).
4. DCorrect: the CGL 'When We Do Not Renew' condition requires written notice at least 30 days before expiration.
More notes ↓
Item 16
A CGL has a $5,000 medical expense limit (per person). Three customers are hurt in a fall and incur medical bills of $7,000, $3,000 and $2,000. How much does Coverage C pay?
1. ACorrect: the per-person cap holds the first customer to $5,000, and the others get $3,000 and $2,000, for $10,000.
2. B$15,000 pays the full $5,000 limit to each person regardless of the actual bills.
3. C$5,000 treats the per-person limit as if it were a per-accident limit.
4. D$12,000 adds up the bills and ignores the $5,000 per-person cap.
More notes ↓
Item 17
A claims-made CGL policy runs from January 1 to December 31, 2025, with a retroactive date of January 1, 2023. Which claim is covered by this policy?
1. AAn injury in 2026 happens after the policy has expired, so this policy does not cover it.
2. BA 2022 injury predates the January 1, 2023 retroactive date, so it is not covered.
3. CCorrect: the 2024 injury is after the retroactive date, and the May 2025 claim is first made during the policy period.
4. DA claim made in May 2023 falls before this 2025 policy period, so this policy does not respond.
More notes ↓
Item 18
A contractor is sued after an injury caused partly by a negligent subcontractor. Which action by the contractor would violate the CGL's transfer of rights of recovery condition?
1. ANotifying the subcontractor of the claim protects the recovery rights rather than impairing them.
2. BCorrect: the insured must do nothing after a loss to impair the insurer's recovery rights, and a release destroys them.
3. CGiving the insurer the subcontract helps it pursue recovery.
4. DReporting the accident to the police has no effect on the insurer's rights against the subcontractor.
More notes ↓

Mixed practice test · Timed mock

Where the CGL boundaries sit

Which limit pays a claim from a product the insured already sold?

The products-completed operations aggregate, which is separate from the general aggregate, so a run of product claims cannot use up the limit available for premises accidents. Products still in the insured's physical possession fall outside that hazard.

How does BOP liability compare with a CGL?

Section II of the businessowners policy borrows the CGL's coverages but uses one Liability and Medical Expenses limit per occurrence, with both aggregates set at twice that limit. A CGL lists its six limits separately.

Why does an advertising agency need more than Coverage B?

Coverage B excludes insureds whose business is advertising, broadcasting, publishing or telecasting, and most internet businesses, so their core exposure goes to a separate media or professional liability policy. For every other business, Coverage B covers infringement only inside the insured's own advertisement.

ACoverages A, B and C side by side

BLimits, insureds and the exclusions that matter