Commercial General Liability Coverage Details

The commercial general liability (CGL) policy offers coverage designed to protect businesses against a wide range of liabilities.

Bodily injury and property damage coverage is central to the CGL policy, protecting the insured against claims of bodily injury or property damage that occur as a result of the business's operations or premises. Whether a customer slips and falls on the business premises or there is accidental damage to a client's property, this aspect of the policy offers protection against the financial repercussions.

Personal and advertising injury coverage protects against claims of libel, slander, defamation, copyright infringement in advertisements, and invasion of privacy. This part of the policy is particularly important for businesses engaged in marketing and advertising activities, providing protection against claims that could arise from such operations.

Products and completed operations coverage offers protection against liability for bodily injury or property damage that may result from the use of the business's products or from work the business has completed. It is a critical coverage area for manufacturers, retailers, and contractors, addressing claims that could arise long after a product has been sold or a project has been completed.

The premises and operations coverage provides protection against liabilities that occur on the business's premises or as a direct result of its operations. This coverage extends to a wide range of scenarios, from accidents occurring within the company's facilities to damages caused by the company's activities at a client's site.

Commercial General Liability Insurance: Exclusions and Limitations

Common exclusions in CGL insurance include those for:

• Intentional Injury. CGL policies typically do not cover bodily injury or property damage resulting from intentional acts or misconduct by the insured.
• Employment Practices. Claims related to employment practices, such as discrimination, harassment, or wrongful termination, are often excluded via endorsement to a CGL policy. These exposures highlight the need for separate employment practices liability insurance.
• Professional Liability. CGL policies, by way of an exclusionary endorsement, typically do not cover liabilities arising from professional services or advice. Professionals such as architects, engineers, and consultants often need professional liability insurance to cover these risks.
• Pollution. Damages resulting from the release of pollutants are generally excluded from standard CGL policies, necessitating additional pollution liability coverage for businesses at risk for environmental liabilities.
• Cyber Liability. As cyber threats continue to evolve, it's important to note that CGL policies typically exclude liabilities arising from data breaches or cyber attacks. Cyber liability insurance is required to address these specific risks.

It's also important for insureds to understand CGL policy limits and deductibles. The policy limit is the maximum amount an insurer will pay under a policy for a covered loss. CGL policies can have different limits for each coverage area, and it's crucial to choose limits that adequately reflect the business's risk exposure.

A deductible is the amount the insured must pay out of pocket before the insurer pays a claim. Higher deductibles can lower premium costs, but businesses must ensure they can afford the deductible in the event of a claim.

Importance of CGL Insurance for Businesses

CGL insurance covers a broad spectrum of risks, including bodily injury, property damage, personal and advertising injury, and more. This wide-ranging protection helps businesses manage unforeseen risks effectively.

The financial implications of a lawsuit can be devastating for a business. CGL insurance safeguards against the high costs associated with legal defense, settlements, and judgments, providing financial stability in the face of liability claims.

It's also very common for contracts to require businesses to carry CGL insurance. This requirement protects both parties in the event of a liability claim related to the business's operations or services.

FAQs

Q: What is the difference between CGL and professional liability insurance?

A: CGL insurance primarily covers bodily injury, property damage, personal and advertising injury claims that arise from the business's operations, premises, products, and completed operations. Professional liability insurance, on the other hand, protects against claims arising from professional services or advice, such as errors, omissions, negligence, and breaches of duty. Essentially, CGL insurance covers physical risks, while professional liability addresses financial losses or damages from professional advice or services.

Q: Does a CGL policy cover employee injuries?

A: No, a CGL policy does not cover injuries to employees. Employee injuries are typically covered under workers compensation insurance, which is specifically designed to provide coverage for medical expenses, lost wages, and rehabilitation costs for employees injured on the job. CGL coverage is focused on third-party claims for bodily injury, property damage, and other types of liabilities.