Emotional Distress: Cgl Policy Coverage Explained

Commercial General Liability (CGL) insurance policies are designed to protect businesses from a wide range of risks, including property damage, personal and advertising injury liability, and medical payments. While CGL policies typically cover bodily injuries, there is ambiguity around whether emotional distress constitutes a bodily injury and is therefore covered. This determination can vary depending on the jurisdiction and the specific facts of each case. Some courts have held that emotional distress without physical symptoms does not meet the definition of bodily injury, while others have found ambiguity in policy language or interpreted sickness or disease to encompass mental injury. Understanding the scope of CGL coverage is crucial for businesses to manage their risks effectively.

Emotional distress without physical symptoms

Emotional distress is a state of mental anguish that can result from a mental health issue or particular circumstances, such as relationship difficulties or financial strain. It is a broad term that can refer to a wide range of symptoms, including those similar to depression and anxiety. Emotional distress is not typically covered by primary CGL policies as it is not considered a "bodily injury". However, some states and courts include mental anguish within the definition of "bodily injury", providing coverage for emotional distress. Excess and umbrella policies may also define "bodily injury" differently and include mental anguish within their scope, offering coverage for solely emotional distress damages.

The causes of emotional distress vary and can include traumatic events, financial difficulties, job loss, toxic work environments, discrimination, and major life changes. It is important to note that emotional distress can affect anyone and is not limited to those with mental health disorders. While it usually resolves on its own or with stress management techniques, seeking professional help is advisable if emotional distress persists or interferes with daily functioning.

To summarise, emotional distress without physical symptoms encompasses a range of symptoms that can significantly impact an individual's life. While primary CGL policies typically exclude it from coverage, certain states, courts, and excess or umbrella policies may provide coverage by including mental anguish within the definition of "bodily injury".

Emotional distress with physical symptoms

Emotional distress can manifest in various physical ways. The physical symptoms of emotional distress can include:

• Headaches or migraines
• Fatigue or exhaustion
• Sleep problems
• Weakened immune system
• Skin problems
• Chest pain or heaviness in the chest
• Increased heart rate
• Body aches and pains
• Grinding teeth or clenching jaw
• Gastrointestinal problems
• Shortness of breath
• Sudden weight changes

While emotional distress can have physical symptoms, it is not typically covered by primary Commercial General Liability (CGL) policies. This is because emotional distress does not fall under the definition of "bodily injury" as outlined in the standard CGL policy. However, some states in the US include mental anguish within the standard Insurance Services Office, Inc. (ISO) definition of bodily injury, thereby providing coverage for damages related to emotional distress.

To trigger the duty to defend under a CGL policy, many states require specific allegations of physical symptoms resulting from emotional distress. For example, in Minnesota, only emotional distress with "appreciable physical manifestations" will satisfy the bodily injury trigger for CGL coverage. Therefore, it is essential to review the specific laws and policies applicable to your jurisdiction to determine whether emotional distress with physical symptoms is covered under a CGL policy.

Primary CGL policies

Emotional distress is typically not covered under primary Commercial General Liability (CGL) policies. This is because emotional distress is not considered to be included in the policy definition of "bodily injury", which is a prerequisite for coverage. However, it is worth noting that some states and courts have interpreted the policy definition differently, and so in certain circumstances, emotional distress may be covered.

The standard ISO CGL policy form defines "bodily injury" as:

> "bodily injury, sickness, or disease sustained by a person, including death resulting from any of these at any time."

The majority of jurisdictions hold that this definition does not include purely emotional or mental injuries. This is because the policy language is considered to be clear and unambiguous, and so the term "bodily" is interpreted to imply a physical harm.

However, a minority of jurisdictions and courts have held that the definition of "bodily injury" is ambiguous and can be interpreted to include emotional distress. For example, in Lavanant v. General Accident Insurance Co. of America, the New York Court of Appeals held that emotional distress was enough to constitute bodily injury when tenants suffered emotional distress after a ceiling collapse during a renovation of their apartment. The court stated that the average reader of the policy might reasonably conclude that the definition of "bodily injury" as "bodily injury, sickness or disease" included mental as well as physical sickness.

In addition, it is important to note that excess and umbrella policies often define "bodily injury" differently than primary CGL policies. These policies may include "mental anguish, shock, humiliation, or mental injury" within their definition of bodily injury. As such, these policies can provide coverage for solely emotional distress damages.

Therefore, while emotional distress is typically not covered under primary CGL policies, there are certain circumstances and jurisdictions in which it may be covered. Business owners should consult with an insurance professional to understand the specific coverage provided by their CGL policy and determine if additional coverage is needed.

Excess and umbrella policies

A commercial umbrella liability policy provides two types of coverage. The first is coverage above other insurance policies, referred to as "underlying insurance". The second is coverage for liability exposures for which there is no "underlying insurance". The umbrella policy can be used to cover some losses for which there is no insurance.

On the other hand, an excess policy only covers losses that are covered by other insurance policies that exist as primary insurance. Excess policies are triggered when the loss could reach the policy or once the underlying policy limits are exhausted.

In the context of emotional distress, the impact rule requires that "before a plaintiff can recover damages for emotional distress caused by the negligence of another, the emotional distress suffered must flow from physical injuries the plaintiff sustained in an impact". However, some jurisdictions have completely abrogated the impact rule, allowing for the recovery of purely mental anguish in certain circumstances.

State-specific variations

Coverage for emotional distress under a CGL policy can vary depending on the state. While some states may explicitly include or exclude coverage for emotional distress, others may have specific laws and regulations that impact the interpretation of the policy. It is important to review the specific laws and regulations in your state to understand the coverage provided by a CGL policy.

For example, in California, emotional distress claims could be covered under the Unfair Competition Law (UCL), which prohibits any "unfair, deceptive, untrue, or misleading advertising." This means that if a business engages in practices likely to cause emotional distress to its customers, it may be held liable.

In contrast, other states may have more restrictive interpretations of emotional distress coverage. Each state and policy will differ, but as an example, New York courts might require that emotional distress claims must be "severe and debilitating" to be covered. This means that the distress must significantly impact the individual's ability to function.

Additionally, some states may have specific exclusions or limitations on coverage. For example, Florida has a "limited duty to defend" clause, meaning the insurer is only responsible for defending against specifically covered claims. If a claim for emotional distress falls outside the policy, the insurer may not provide a defense.

Frequently asked questions