Before addressing the multitude of exclusions, an initial step in evaluating coverage under a commercial general liability (CGL) policy is whether the claim against the insured falls within the coverage clause—that is, whether there was bodily injury or property damage. Property damage takes many forms—from contaminated groundwater to a broken bridge to a water-logged computer to damaged currency. This article explores the definition of “property damage” and how courts throughout the country have applied the definition.
CGL policies cover amounts that an “insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies.” CGL policies generally define property damage as follows:
a. Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or
b. Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the “occurrence” that caused it.