An accident happens in May, the customer notices damage in August and the claim arrives the following February. The business has changed insurers in between. Which policy should respond? A broker may have provided a certificate confirming that coverage existed, but the certificate doesn't answer what event triggers protection under the actual contract.
For many commercial general liability policies, the starting point is an occurrence that causes bodily injury or property damage during the relevant coverage period. Other liability policies, particularly those written for professional risks, may be triggered by a claim first made against the insured within the defined period and may impose additional reporting requirements. The distinction has a history in Canadian case law, and it explains why simply asking whether the business was insured on the day it received the lawsuit can lead to the wrong answer.
An occurrence isn't just a date on the claim form
An occurrence form generally focuses on the event causing covered injury or damage within its period, subject to the policy definitions and exclusions. An activity performed years earlier doesn't by itself tell us when property was damaged. Damage can develop or be discovered later, and particular policy forms may treat gradual or repeated exposure differently. Someone assessing a disputed loss needs to identify the relevant harm, the applicable wording and the evidence that can place the event within a policy period.
Consider a contractor whose faulty work eventually causes water damage to a customer's building. The installation date, first appearance of the leak, extent of physical damage and date the claimant contacts the contractor may all be different. A contractual promise about the quality of the contractor's work doesn't automatically identify an insured occurrence. Nor does the fact that someone pleads negligence establish that the policy responds.
The Supreme Court's decision in Progressive Homes Ltd v Lombard General Insurance Co of Canada, 2010 SCC 33, demonstrates why the analysis must begin with the coverage grant, then consider exclusions and exceptions. It rejected an interpretation that necessarily placed property damage caused by defective workmanship outside the concept of an accident under the wording examined. That doesn't make every defective project an insured loss, because the policy's exclusions and definitions continue to matter.
Claims made wording answers a different timing question
In Reid Crowther & Partners Ltd v Simcoe & Erie General Insurance Co, [1993] 1 SCR 252, the Supreme Court examined the operation of claims made and hybrid liability insurance. A claims made contract can focus on when the third party asserts a claim against the insured, rather than only when an earlier negligent act occurred. The actual meaning of claim and any notice requirements must still be established from the contract. A concern known to the insured isn't always the same thing as a claim made by another person.
That distinction often becomes important to businesses buying professional liability alongside a CGL policy. A manufacturer, consultant or professional adviser may need to maintain continuous claims made coverage or purchase an appropriate reporting extension when changing carriers. A CGL policy purchased for one period doesn't automatically fill a gap created by a separate professional liability form, and a claims made endorsement shouldn't be treated as though it has the same timing rules as a pure occurrence grant.
The injury and the claimed loss must be separated
Commercial liability coverage commonly distinguishes bodily injury and property damage from other losses. Tangible property that was physically injured provides a different starting point from the simple failure to achieve an expected profit. Some policy forms also address loss of use, with their own definitions and exclusions. An allegation of substantial damages may contain several heads of loss, not all of which meet the insuring agreement.
Consider a seed supplier accused of providing the wrong variety to a farmer. If the claim concerns an existing crop physically damaged by a defective product, that may raise one kind of property damage allegation. If the plants remain healthy but yield falls short of an optimistic forecast, the issue may instead involve expected income, contractual promises or professional advice. No conclusion about coverage should be reached from the amount claimed alone. The timing and actual mechanism of any injury must be established before the language of the policy can sensibly be applied.
Exclusions may also alter the result. Products and completed operations restrictions, professional services limitations, exclusions related to the insured's work or product, contractual liability wording and pollution clauses can all matter, depending on what is actually in the policy. The court won't invent an endorsement merely because a business expected its insurance to be comprehensive.
Paying for a defence isn't the same as paying a judgment
A liability insurer may owe a defence when there is a mere possibility of a covered claim based on the true substance of the pleaded allegations. Progressive Homes explains that the duty to defend doesn't require the claimant to prove the case in advance. A reservation of rights can therefore be consistent with an insurer providing a defence while leaving ultimate indemnity undecided.
That position may be frustrating to a business owner, but it isn't inherently contradictory. Defending the lawsuit protects against a possibility of liability within the contract. Indemnity depends on the facts ultimately established and whether the resulting legal obligation falls within the policy after exclusions and other terms have been applied. The business should keep a separate record of its insurer's defence position, the coverage reservation and any independent advice on indemnification.
The practical question for a renewal meeting is not just whether the certificate says CGL. It's whether the entire insurance program addresses the business's activities, timing exposures, and the kinds of losses that may arise after its work has been done.
Sources and further research
Progressive Homes, 2010 SCC 33 and Reid Crowther, [1993] 1 SCR 252 provide the principal Canadian framework. Emond v Trillium Mutual Insurance Co, 2026 SCC 3 reinforces the importance of interpreting the complete policy and its endorsements, although it concerns property coverage rather than a CGL duty to defend. For agricultural applications see Binder's review of harvest losses and liability insurance.