Standard commercial general liability policies

Bodily injury

What constitutes bodily injury under a standard CGL policy?

Commercial general liability is now used in the insurance market to describe some insurance policies in England and Wales. These policies are more widely described as being public and product liability policies, which provide cover in respect of an insured’s liability to third parties in respect of personal injury or property damage caused by the insured. It is normal for personal injury to be defined by the policy and these definitions usually cover injury, sickness, disease and death resulting from such an injury.

Property damage

What constitutes property damage under a standard CGL policy?

Property damage in a public and product liability policy is typically defined as being loss or physical damage to the property of a third party.

Occurrences

What constitutes an occurrence under a standard CGL policy?

Public liability policies are occurrence-based, when the policy is triggered on the occurrence of the insured event – usually bodily injury or property damage specified in the policy. In contrast, product liability policies can be occurrence or claims-made policies. Under a claims-made policy, indemnity is triggered by notification of a claim or circumstance to the insurer.

How is the number of covered occurrences determined?

Typically, a policy will specify a certain level of cover per claim, and that the total cover provided will be subject to an aggregation of claims, whereby all claims arising out of the same occurrence are treated by the insurer as a single claim. Whether or not different claims ‘aggregate’ for the purpose of cover has been the subject of a great deal of litigation and its outcome is usually sensitive to the relevant facts and policy wording. Nevertheless, analysis of what is an occurrence is considered by reference to a number of factors including time and location.

In March 2017 the Supreme Court handed down one of the most important judgments related to aggregation provisions in recent years, in AIG Europe Limited v Woodman and others [2017] UKSC 18. The decision provided useful guidance on the meaning of the phrase ‘a series of related matters or transactions’ when used in an aggregation clause, namely that this requires some ‘real connection’ between the transactions. The judgment also serves as a reminder that the application of any aggregation clause is a fact-sensitive exercise.

Coverage

What event or events trigger insurance coverage?

As set out in ‘Occurrences’, there are crucial differences between occurrence-based and claims-made policies. Policies written on a loss-occurring basis are triggered by the occurrence of bodily injury or relevant damage (as specified by the policy). Claims-made policies are triggered by notification of a claim or circumstance to the insurer. For this reason, compliance with notification provisions is essential to ensuring cover is provided under a claims-made policy.

How is insurance coverage allocated across multiple insurance policies?

One insurer may pay the claim and then seek recovery from the other insurers; however, insurers will often include wording to exclude cover if there is more than one policy.

Law stated date

Correct on

Give the date on which the information above is accurate.

25th November 2019