A commercial general liability policy, called a CGL, is three promises stacked on a limits page. The Insurance Information Institute describes the same three parts: Coverage A for bodily injury and property damage, Coverage B for personal and advertising injury, and Coverage C for medical payments. Most business owners only ever see the declarations page, the one with the dollar amounts. The promises and the fine print live in the form behind it. This guide reads that form the way you would read a bid package, one section at a time.
I am a landlord and a cost estimator, not an agent. Nothing here tells you what to buy or how much to carry. Where your choice depends on your facts, ask a licensed agent.
Which form this guide reads
The base form most commercial policies start from is published by Insurance Services Office, Inc. (ISO) as CG 00 01, the occurrence version of the Commercial General Liability Coverage Form. I read the 04 13 edition, which carries a 2012 ISO copyright line. Carriers can use other editions and rewrite parts of it, so the edition number printed on your own policy governs. Everything below quotes or paraphrases the 04 13 text, as of October 2026.
The form is organized in five sections. Section I holds the three coverages and the exclusions. Section II says who counts as an insured. Section III is the limits page. Section IV lists the conditions, including what you must do after an accident. Section V is the definitions. That last one matters more than it looks, because words in quotation marks in the form, like “occurrence” and “your work,” mean exactly what Section V says and nothing else.
Coverage A, bodily injury and property damage
Coverage A is the main event. The insuring agreement says the insurer “will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” It also gives the insurer “the right and duty to defend the insured against any ‘suit’ seeking those damages.”
Three conditions sit under that sentence. The injury or damage must be caused by an “occurrence” in the coverage territory. It must happen during the policy period. And before the policy began, no listed insured and no employee authorized to receive notice knew it had occurred (Source). The last condition is the known-loss rule. A leak you already knew about in March does not become covered because you bought a policy in April.
Section V defines “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” Accident is the operative word. It sets up the first exclusion below.
The defense duty has an end date. The form says the insurer’s “right and duty to defend ends when we have used up the applicable limit of insurance in the payment of judgments or settlements.” Defense costs themselves are paid as Supplementary Payments, and the form states that these payments “will not reduce the limits of insurance.” Read that twice, because a lot of owners assume lawyers’ fees eat into the limit. Under this form, the insurer’s own defense expenses do not.
Coverage B, personal and advertising injury
Coverage B pays for a closed list of offenses. Section V defines “personal and advertising injury” as injury arising out of one or more of seven offenses:
- False arrest, detention or imprisonment
- Malicious prosecution
- Wrongful eviction, wrongful entry, or invasion of the right of private occupancy, committed by or on behalf of the owner, landlord or lessor of the premises
- Oral or written publication of material that slanders or libels a person or organization, or disparages their goods, products or services
- Oral or written publication of material that violates a person’s right of privacy
- Use of another’s advertising idea in your “advertisement”
- Infringing another’s copyright, trade dress or slogan in your “advertisement”
The list is the coverage. If a claim against you is not one of the seven, Coverage B does not respond, however bad the claim feels. The coverage applies only to an offense “arising out of your business” and committed during the policy period. Exclusions on the Coverage B page remove, among others, knowing violations of another person’s rights, breach of contract, and failure of goods or services to match a quality or performance claim in your advertising.
Coverage C, medical payments
Coverage C is the small one. It pays medical expenses for “bodily injury” caused by an accident on premises you own or rent, on ways next to those premises, or because of your operations. It pays “regardless of fault,” and the expenses must be incurred and reported to the insurer within one year of the accident.
Because no one has to prove you did anything wrong, Coverage C is built to settle small injuries before they become claims. Its exclusions keep it narrow. It does not pay for injuries to an insured other than a volunteer worker, to a person hired to do work for you or a tenant of yours, to a person injured on the part of your premises that they normally occupy, or to anyone covered by workers’ compensation (Source). It also excludes injuries within the products-completed operations hazard, which matters for the next section.
The limits page, Section III
Section III turns the three promises into dollar caps. Six limits show up on most declarations pages, and the form’s paragraphs define how they stack (Source).
Each Occurrence Limit. Paragraph 5 makes this “the most we will pay for the sum of damages under Coverage A and medical expenses under Coverage C because of all ‘bodily injury’ and ‘property damage’ arising out of any one ‘occurrence.’” One event, one cap, no matter how many people are hurt.
General Aggregate Limit. Paragraph 2 makes this the most the insurer will pay for the sum of Coverage C medical expenses, Coverage A damages except those in the products-completed operations hazard, and all Coverage B damages. It is the policy-period ceiling for everything that is not a completed job or a sold product.
Products-Completed Operations Aggregate Limit. Paragraph 3 gives completed work and sold products their own ceiling, separate from the general aggregate.
Personal and Advertising Injury Limit. Paragraph 4 caps Coverage B damages for any one person or organization.
Damage To Premises Rented To You and Medical Expense Limits. Paragraphs 6 and 7 are sublimits. The first covers property damage to a single premises you rent. The second caps Coverage C medical expenses for any one person.
Here is the arithmetic, using invented numbers so you can see the structure. These are not suggested limits. Say a policy shows $1,000,000 each occurrence, $2,000,000 general aggregate, and $2,000,000 products-completed operations aggregate. A loss you cause in March produces $700,000 in damage to a neighbor’s property, then a customer injury produces $1,200,000 in September. The September claim is capped at $1,000,000 by the each occurrence limit. Combined paid damages cannot exceed the $2,000,000 general aggregate, and the products-completed operations aggregate is untouched, because neither loss arose from finished work. A defect claim on a completed job in November draws from that separate $2,000,000 instead.
One more line from Section III changes the math across years. The limits “apply separately to each consecutive annual period.” The aggregates reset when the policy renews.
What limit fits your contracts is a question for a licensed agent. Customers, landlords, and general contractors often write minimum limits into their agreements, so read the contract before you read the declarations page. If a loss could exceed the CGL limits, an excess or umbrella policy sits above them, a structure covered in our guide to umbrella policies and LLCs for Texas rental property.
The products-completed operations hazard
This is the phrase that decides whether a finished job is still insured. Section V defines the “products-completed operations hazard” as all bodily injury and property damage occurring away from premises you own or rent and arising out of your product or your work, except products still in your possession and work not yet completed or abandoned. Work is deemed completed at the earliest of three points. All the work in your contract is done. All the work at the job site is done, if the contract covers more than one site. Or the part you did has been put to its intended use by someone other than another contractor on the same project.
Work that “may need service, maintenance, correction, repair or replacement” but is otherwise complete is treated as completed. So the hazard starts the day you hand the job over, not the day the final invoice is paid, and a punch-list item does not keep it open.
The exclusions new trade businesses most often misread
The exclusions in Section I are where owners expect coverage and find a clause instead. Three do most of the damage.
Expected or intended injury, exclusion a
The form excludes “bodily injury” or “property damage” “expected or intended from the standpoint of the insured.” This exclusion is the other side of the word “accident” in the occurrence definition. The exclusion does not apply to bodily injury “resulting from the use of reasonable force to protect persons or property.”
The phrase “from the standpoint of the insured” is the part to watch. How a court reads that phrase turns on the facts. Ask a licensed agent or an attorney how it applies to your situation rather than relying on a summary here.
Contractual liability, exclusion b
The form excludes bodily injury or property damage “for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement.” Two exceptions pull coverage back. The exclusion does not apply to liability the insured “would have in the absence of the contract or agreement,” and it does not apply to liability assumed in an “insured contract.”
The definition of “insured contract” in Section V includes a lease of premises, a sidetrack agreement, an easement or license agreement, an elevator maintenance agreement, and certain municipal indemnity obligations. It also includes “that part of any other contract or agreement pertaining to your business” under which you assume “the tort liability of another party to pay for ‘bodily injury’ or ‘property damage’ to a third person or organization.” That last piece is the one that matters to trades. A subcontract or service agreement with a hold-harmless clause is the usual example.
Two limits to the exception. It reaches tort liability, meaning liability the law would impose without any contract. A promise to guarantee quality, meet a deadline, or pay a penalty is not tort liability. And the form states which indemnities do not qualify, including certain obligations tied to work near railroads and certain obligations for architects, engineers and surveyors. Contracts also change over time, and endorsements can limit or reshape the insured contract definition. Have a licensed agent read the actual contract and the actual endorsements together.
Your product and your work, exclusions k, l and m
These three exclusions are why a CGL is not a warranty.
Exclusion k, Damage To Your Product. The form excludes “property damage” to “your product” arising out of it or any part of it. If you sell or install a product and it fails, the cost of the failed product is yours.
Exclusion l, Damage To Your Work. The form excludes property damage to “your work” arising out of it or any part of it and included in the products-completed operations hazard. Read the last clause. The exclusion applies to completed work. The form adds: “This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor.” That sentence is why subcontracted work and self-performed work can be treated differently under the same policy. Endorsements on your own policy can change it.
Exclusion m, Damage To Impaired Property Or Property Not Physically Injured. The form excludes property damage to “impaired property,” or to property not physically injured, arising out of a defect in your product or work, or from “a delay or failure by you or anyone acting on your behalf to perform a contract or agreement in accordance with its terms.” Section V defines impaired property as tangible property, other than your product or work, that cannot be used or is less useful because it incorporates your defective work or because you failed to fulfill a contract, if it can be restored by repairing or replacing your work or by you finishing the contract. A late job that idles the customer’s building is a delay claim, and this is the clause that addresses it.
Exclusion n adds recall costs. If your product or work is pulled from use because of a known or suspected defect, the cost of withdrawing it is excluded too.
There is also a property damage exclusion, exclusion j, that deals with work in progress. Among its paragraphs, it excludes damage to the particular part of real property on which you or your subcontractors are performing operations, if the damage arises out of those operations, and to the particular part of any property that must be repaired because your work was incorrectly performed on it (Source). The form says paragraph (6), the incorrectly performed work paragraph, does not apply to damage in the products-completed operations hazard. Together, j, k, l and m divide the world into four buckets, and the date the job is done decides which one a claim lands in.
The pattern across all of these is that a CGL pays for the harm your work does to other people and their property. It does not pay to make your own work right. If that distinction shapes your bids, ask a licensed agent what other coverages exist for it.
Occurrence versus claims-made
CG 00 01 is the occurrence form. The trigger is when the bodily injury or property damage happens, not when someone sues. If a deck you built in 2024 collapses in 2027 and the injury happens in 2027, the policy in force in 2027 is the one that responds, assuming the other conditions are met.
A claims-made form flips the trigger. Craig Stanovich of IRMI wrote in November 2012 that the standard ISO claims-made CGL “is triggered when a claim for bodily injury or property damage is made against an insured,” and that the claim “must be made against an insured during the policy period.” The form uses a retroactive date. IRMI notes that on the standard claims-made CGL the retroactive date applies only to bodily injury or property damage deemed to have occurred before that date, and unlike professional liability forms it does not apply to prior acts.
Two features of claims-made coverage affect how you buy it. Lapsing or switching carriers can leave a gap, so the extended reporting period exists. IRMI describes a basic extended reporting period that protects the insured automatically at no added charge and a supplemental period that must be elected and paid for, with the standard ISO form capping the added premium at 200 percent of the annual premium. And a retroactive date that moves forward shrinks the protection you thought you had.
Which trigger you have is printed on the form. Customer contracts can specify the trigger by name, so read yours before you accept a claims-made policy.
What the form asks of you after a loss
The conditions in Section IV give you duties. You must see to it that the insurer is notified “as soon as practicable” of an occurrence or offense that may result in a claim, with how, when and where it happened, the names of injured people and witnesses, and the nature of the injury or damage. If a claim is made or a suit brought, you must record it and the date received, notify the insurer, and immediately send over any demands, notices or summonses.
Questions to put in front of your agent
A form tells you the default. Your policy is the form plus the endorsements, and those can change everything above. Ask a licensed agent these, and ask for the answers in writing:
- Which edition of the CG 00 01 form is attached, and which endorsements modify exclusions j through n?
- Is the policy occurrence or claims-made, and if claims-made, what is the retroactive date?
- Do my customer contracts require limits, additional insured status, or a waiver of subrogation that this policy provides?
- Do my subcontracts contain indemnity clauses, and does the “insured contract” definition on this policy reach them?
- Where does my work stop being operations and become completed work, and which aggregate responds on each side of that line?
To compare policies from different insurers on equal terms, see our guide to comparing insurance quotes, which applies the same compare-the-policy-not-the-price habit to home insurance quotes. If you rent out property as well as run a trade, the landlord insurance guide explains the dwelling fire policy behind a rental property.