Canada: The CGL Policy: Coverage A Concepts


The Commercial General Liability ("CGL") Policy is the standard policy of insurance issued to businesses and commercial organizations to insure against third party liability for, among other things, bodily injury and property damage that arising out of the course of the insured's business operations. The CGL policy is sometimes referred to, in a nutshell, as the policy that insures businesses from third party claims resulting from accidents, including negligent behaviour, for which the insured is legally obligated to pay damages.

At the same time, as has been argued on countless occasions by insurers with some success, the CGL policy is not a warranty or performance bond to be looked to in the event of product or workmanship failures. This paper focuses on judicial interpretations of certain terminology and exclusions from Coverage A of the CGL policy. Specifically, this paper canvasses the meaning of "bodily injury" and "property damage" as those terms are typically defined in the CGL policy. Moreover, the scope and judicial interpretation of the typical "business risks" exclusions from coverage are also discussed.


Most CGL policies cover "bodily injury" caused by an "occurrence", which is typically defined to mean an accident, including the continuous or repeated exposure to the same harmful conditions, for which the insured is legally obligated to pay damages to another.

The term "bodily injury" is commonly, though not always, defined as follows:

Bodily injury, sickness or disease sustained by any person which occurs during the policy period, including death at any time resulting therefrom.

In reference to the foregoing definition, one question that may come to mind is what exactly constitutes a "bodily injury" given that it makes reference to the term "bodily injury" in the definition itself. Similarly, other questions include what is the significance of the words "bodily", "injury", "sickness", or "disease" as they appear in the definition?

Scope of Coverage

Judicial interpretation of the CGL "bodily injury" definition has extended the term beyond typical physical pain. Any sickness or disease, whether it is physical or mental, is now generally captured by the definition.

The current judicial consensus in Canada appears to be that the words "sickness or disease" contemplate internal body issues. Authors of the Annotated Commercial General Liability Policy note that the term "sickness" "has been defined as a condition which simply interferes with one's usual activities", and that the term and its interpretation are quite broad. The term "disease" has specifically been found by Canadian courts to include "an ailment that disorders one or more of the vital functions or organs of the body, causing a morbid physical condition", as a condition of pathological origin, or finally as a deviation of normal or healthy functions.[3]

One issue that attracted considerable judicial attention in the past was whether emotional distress absent a physical manifestation of injury could constituted a "bodily injury" as that term was defined in the CGL policy. In Victoria General Hospital v. General Accident Assurance Co. of Canada[4], it was held that "bodily injury, sickness or disease" included coverage for a claim for severe emotional trauma resulting from incidents of sexual abuse. The Court in Victoria General Hospital relied on a perceived ambiguity on the basis that the insurer:

chose to define "bodily injury" as "bodily injury", followed by a comma, and then followed by the words, "sickness or disease." It is certainly open for a court to consider that in this policy "bodily injury" means three separate and distinct acts or events or occurrences, namely:

bodily injury, which taken alone might be restricted to those cases involving physical injury but, according to some of the American authorities, not necessarily so

sickness, which is by definition something different from physical injury;

disease, which is by definition something different from physical injury.

Consequently, a physical manifestation of the "sickness or disease" was not necessary for the Court to find that severe emotional trauma caused by sexual abuse constituted a "bodily injury" as defined in the policy. At the time, Victoria General Hospital represented a divergence from Ontario precedent, which had held that where the alleged injuries originated in the mind, and not the body, the "bodily injury" definition was not satisfied.[5] Victoria General Hospital is consistent with judicial opinion across Canada at present.

It has also been held that nervous shock, depression and psychological trauma stemming from sexual abuse amounted to "bodily injury, sickness or disease" in the context of an exclusion in a directors' and officers' liability policy.[6] This is significant as exclusions by their nature are interpreted more narrowly than the CGL Insuring Agreement's "bodily injury" definition.

There is also precedent in Ontario extending the definition of "bodily injury" to non-physical injuries. In Elmford Construction Co. v. Canadian Indemnity Co.[7], the Ontario Superior Court of Justice held that emotional distress that resulted from a plaintiff's fear that a retaining wall might collapse could possibly be argued to constitute "... bodily or mental injury or illness ... ":

With respect to the Caverlys' claim for damages for emotional stress, Canadian Indemnity submits that the policy covers only for "mental injury" and that emotional stress is not mental injury. It appears that Canadian Indemnity believes the policy covers only a direct injury to the brain. I suspect that, in a business liability policy such as in issue in this case, there would be very few situations where there would be evidence of objective mental injury. The policy covers "... damages because of bodily or mental injury or illness...." A court could possibly fit damages for emotional stress within that provision.

While mental illness and severe emotional distress absent any physical manifestation often constitutes "bodily injury", the term does not encompass injury to a person's reputation. In Maillet v. Halifax Insurance ING Canada[8], the Court of Queen's Bench of New Brunswick held that an injury to an individual's reputation could not trigger a liability policy's insuring agreement:

With respect however, it bears repeating that the Plaintiff is suing for defamation because of injury to his reputation. He is not claiming damages for 'loss of sleep' or for any other physical inconvenience. Those manifestations are supportive of his allegation that the Applicant's alleged defamatory remarks caused him grief and damaged his reputation in the community. That is the basis of his suit.

The policy covers damages arising from personal injuries or property damage. It would be stretching the ordinary terms of the policy to find that damages arising from injury to reputation falls within the category of 'bodily injuries.'

The British Columbia Supreme Court made a similar finding in Strata Plan NW3341 - Riverwest v. Royal Insurance Co.[9] An action was commenced against the owners of a Strata Plan alleging that the failure to complete repairs made a unit unfit for habitation. An argument was raised that such unfitness vis-à-vis a person with a heart condition constituted an allegation of "bodily injury... sustained by a person." The Court quickly rejected this argument:

Even reading the pleadings broadly as I must do in considering whether there is a duty to defend, in my view the allegation is one of lost usage of the property, not bodily injury. I do not consider the pleadings might raise a claim for damages for bodily injury, and I do not find a duty to defend on the basis of "bodily injury".

To view the article in full click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
6 Feb 2019, Other, Toronto, Canada

When it comes to class actions, costs regimes vary across Canada. Ontario follows the traditional two-way costs regime while other jurisdictions like British Columbia have adopted a no cost regime.

Similar Articles
Relevancy Powered by MondaqAI
Field LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Field LLP
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions