What You Need to Know About Commercial General Liability Insurance

Commercial general liability (CGL) insurance is an essential part of every business owner’s insurance package. It protects you and your business against claims of injury, property damage and negligence related to your business activities, and it helps you cover the costs associated with a legal defense, as well.

Business owners often find that clients require them to have commercial general liability coverage. So having the right insurance is not only about protecting yourself; it also can help you gain new business and instill a sense of confidence in your clients.

What You Need to Know

A CGL policy provides financial protection from risks that you face in your day-to-day business operations. Any business owner, no matter how many precautions he or she takes, is at risk for liability claims. Liability claims can arise from injuries or property damage that occur on your business property, or those that are caused by you or your employees in the course of doing business. CGL policies pay for attorney fees and any judgments that you might have to pay if you are sued, and also provide coverage for claims of libel, slander, copyright infringement and false advertising.

Specifically, CGL policies cover you for claims related to:

• Bodily injury and property damage related to the ownership and maintenance of a business premises, or as the result of operations conducted both at and away from the business premises
• Bodily injury or property damage that results from faulty products or completed operations (work performed by your business)
• Negligent actions of independent contractors and subcontractors that you hire

Your CGL policy will pay for claims related to accidental bodily injury or property damage, personal injury or advertising injury, and medical expenses for individuals injured on your business property or by the business operations, regardless of who is at fault. But not every type of liability exposure is covered by general liability insurance. You might need to add certain endorsements onto your standard CGL policy, or you may have to purchase additional policies to fill any coverage gaps that you have.

In general, CGL policies exclude coverage for the following types of liability claims:

• Workers’ compensation
• Professional liability or errors and omissions
• Commercial auto liability
• Directors’ and officers’ liability
• Pollution liability
• Claims resulting from damage to the property of others that is in the care, custody and control of the business
• Product recall liability
• Legal actions that do not involve a claim for bodily injury, property damage, personal injury or advertising injury
• Contract disputes
• Failure to provide a safe workplace

Additional business insurance policies such as commercial umbrella, professional liability and directors’ and officers’ liability are available to cover these gaps. Or, you can purchase endorsements to add coverage for employment practices liability, liquor liability, employee benefits liability and other areas where you may have more unique liability exposures.

For some business owners, CGL policies can be simplified by purchasing a business owners policy, or BOP. A BOP is a type of business insurance policy for smaller businesses that bundles property and liability insurance together into once comprehensive business insurance policy. The general liability coverage within a BOP will typically offer the same types of coverage and exclusions as CGL policies purchased on their own. Talk to us about which type of policy is right for your business.

Do you have CGL coverage or a BOP for your business? Do you think that you might have some gaps in your business insurance coverage? What types of risks does your business face?