Commercial General Liability Insurance Covers

 

What Is Commercial General Liability (CGL)?

Commercial General Liability (CGL) is a type of insurance policy that provides coverage for businesses against claims of third-party bodily injury, property damage, and other related damages. CGL insurance policies typically cover legal fees, settlements, and judgments that result from such claims.

Business Owners Policy Insurance

CGL policies are designed to protect businesses from various types of risks and liabilities that may arise during the course of their operations. For example, if a customer slips and falls in a store or if a company's product causes harm to a consumer, a CGL policy can provide coverage for the resulting damages and expenses.

CGL insurance policies typically have a limit of coverage that the insurer will pay out for any given claim or series of claims. This limit can vary depending on the type of business, the level of risk involved, and other factors. Businesses can often choose the level of coverage they need based on their specific needs and the risks they face.

CGL insurance is an essential part of most business insurance packages, and it is recommended for any business that interacts with the public, operates in a physical space, or produces goods or services that could potentially cause harm to others.

Understanding Commercial General Liability (CGL)

Commercial General Liability (CGL) is a type of insurance policy that provides coverage for businesses against claims of third-party bodily injury, property damage, and other related damages. Let's take a closer look at the key elements of a CGL policy:

1. Coverage: CGL insurance policies cover a wide range of liabilities that businesses face in the course of their operations. These can include bodily injury or property damage resulting from a slip and fall, product liability, and advertising or personal injury claims.
2. Limit of liability: CGL policies come with a limit of liability, which is the maximum amount that the insurer will pay for any given claim or series of claims. This limit can vary depending on the level of risk involved and the type of business.
3. Premiums: The cost of CGL insurance policies is determined based on a variety of factors, including the type of business, the level of risk involved, the coverage limit, and the deductible.
4. Deductible: A deductible is the amount that the insured party must pay out of pocket before the insurer begins to cover the costs of a claim. Higher deductibles typically result in lower premiums.
5. Exclusions: CGL policies may contain exclusions, which are situations or risks that the policy does not cover. Common exclusions may include intentional acts, pollution, and employment-related claims.
6. Additional insureds: A CGL policy can provide coverage to additional insureds, which are other parties that are not listed as the named insured but are still covered under the policy. This can include vendors, contractors, and landlords.

Overall, CGL insurance is an important part of protecting a business against the risks and liabilities that come with interacting with the public and conducting business operations. It is important to carefully review and understand the terms of a CGL policy to ensure that a business has the coverage it needs.

Special Considerations 

When it comes to Commercial General Liability (CGL) insurance, there are several special considerations that businesses should keep in mind:

1. Business-specific risks: Depending on the nature of a business, there may be specific risks that require additional or specialized coverage. For example, a construction company may need coverage for construction defects, while a healthcare provider may need coverage for malpractice.
2. Claims-made policies: Some CGL policies are written on a claims-made basis, which means that the policy only covers claims made during the policy period. This can create coverage gaps if a claim is made after the policy expires.
3. Occurrence policies: Occurrence-based CGL policies provide coverage for claims arising from events that occurred during the policy period, regardless of when the claim is made. These policies may have higher premiums but can offer more comprehensive coverage.
4. Contractual liability: CGL policies typically exclude coverage for liabilities assumed under contract. To ensure adequate coverage, businesses should carefully review and negotiate contracts to manage their contractual risks.
5. Umbrella coverage: For businesses with higher risk exposures, an umbrella policy can provide additional liability coverage above and beyond the limits of a CGL policy.
6. State-specific requirements: Some states have specific requirements for CGL insurance, such as minimum coverage limits or additional coverage for certain types of businesses.

Overall, it's important for businesses to work with their insurance broker or agent to assess their specific risks and ensure that their CGL policy provides adequate coverage. By carefully reviewing the policy terms and understanding its limitations, businesses can better protect themselves against unexpected liabilities and lawsuits.

Example of Commercial General Liability

Here's an example of how Commercial General Liability (CGL) insurance might work:

Let's say that a customer slips and falls in a retail store, suffering a broken arm. The customer decides to sue the store for damages, including medical bills and lost wages.

The store has a CGL policy in place with a $1 million limit of liability. The policy covers bodily injury claims resulting from the store's premises, operations, or products.

The store reports the claim to their insurance company, which assigns an adjuster to investigate the incident. The adjuster determines that the store was indeed negligent in maintaining a safe environment, and that the customer's injuries are legitimate.

The insurance company agrees to settle the claim for $500,000, which includes the customer's medical bills, lost wages, and pain and suffering. The store is responsible for paying a $10,000 deductible, and the insurance company pays the remaining $490,000.

Without CGL insurance, the store would have had to pay the entire $500,000 settlement out of pocket. However, with CGL insurance in place, the store was able to mitigate its financial risk and protect its assets.

This example illustrates how CGL insurance can help businesses protect themselves against unexpected liabilities and lawsuits, and why it is an essential part of most business insurance packages.

What Damages Does CGL Insurance Cover?

Commercial General Liability (CGL) insurance covers various damages resulting from third-party claims against a business. These damages can include:

1. Bodily injury: CGL insurance typically covers medical expenses, lost wages, and pain and suffering resulting from bodily injury to a third party, such as a customer or visitor to a business's premises. This can include slip and fall accidents, dog bites, and other injuries caused by a business's operations.
2. Property damage: CGL insurance can cover damage to third-party property caused by a business's operations, such as damage to a customer's vehicle in a parking lot or damage to a neighboring property during construction work.
3. Personal and advertising injury: CGL insurance can provide coverage for non-physical harm caused by a business's advertising, such as copyright infringement, libel, or slander. This can also include claims related to invasion of privacy or wrongful eviction.
4. Products and completed operations liability: CGL insurance can cover claims related to products liability, such as injuries caused by a defective product sold or manufactured by the business. It can also cover completed operations liability, which is damage caused by a product or service after it has been completed or delivered.

It's important to note that the specific damages covered by a CGL insurance policy can vary depending on the terms of the policy, the business's operations and risks, and other factors. Businesses should carefully review their policy to understand the types of damages that are covered and any exclusions or limitations that may apply.

How Much Does Commercial General Liability Insurance Cost?

The cost of Commercial General Liability (CGL) insurance can vary depending on several factors, including the type of business, the business's size, the level of risk involved in the business's operations, and the amount of coverage needed.

Here are some of the main factors that can affect the cost of CGL insurance:

1. Industry and risk level: Businesses operating in industries with higher risk of injury or property damage, such as construction or manufacturing, can expect to pay higher premiums than businesses in lower-risk industries, such as accounting or consulting.
2. Business size and revenue: Larger businesses with higher revenues may pay more for CGL insurance than smaller businesses, as they have more assets to protect and higher potential liability exposure.
3. Coverage limits: The amount of coverage a business needs can also affect the cost of CGL insurance. Higher coverage limits will typically result in higher premiums.
4. Deductibles: Choosing a higher deductible can lower the premium, as the business will be responsible for paying more out of pocket before the insurance coverage kicks in.
5. Claims history: Businesses with a history of claims or lawsuits may be considered higher risk and may pay higher premiums.

On average, small businesses in low-risk industries can expect to pay between $400 and $600 per year for basic CGL insurance coverage, while larger businesses or those in high-risk industries may pay several thousand dollars or more. However, it's important to note that these are just estimates and that the actual cost of CGL insurance will depend on the specific circumstances of the business.

What Is Not Covered Under Commercial General Liability Insurance?

While Commercial General Liability (CGL) insurance can provide broad coverage for a variety of risks, there are certain types of damages that are typically excluded from coverage. Here are some examples of what is generally not covered under a CGL policy:

1. Intentional acts: CGL insurance typically does not cover damages resulting from intentional acts, such as assault, battery, or false imprisonment. These acts are often considered to be outside the scope of a business's operations.
2. Professional services: CGL insurance typically does not cover damages resulting from the provision of professional services, such as legal or accounting services. Businesses that provide professional services may need to obtain specialized professional liability insurance to protect against these risks.
3. Employee injuries: CGL insurance generally does not cover injuries to employees, which are typically covered under a separate workers' compensation insurance policy.
4. Property damage to the insured's own property: CGL insurance typically does not cover damages to a business's own property. Businesses can purchase property insurance to protect against damage to their own property.
5. Pollution and environmental damage: CGL insurance typically excludes coverage for damages resulting from pollution or environmental damage.
6. Contractual liability: CGL insurance typically does not cover damages resulting from contractual liability, such as breach of contract or failure to fulfill a contractual obligation.

What Does Commercial General Liability (CGL) Insurance Cover?

It's important to note that the specific terms and conditions of a CGL policy can vary depending on the insurer and the type of policy. Businesses should carefully review their policy to understand the types of damages that are covered and any exclusions or limitations that may apply.