Commercial General Liability 101
What Is Commercial General Liability Insurance?
Commercial General Liability (CGL) insurance is a comprehensive insurance product that covers general hazards and business risks. Also known as General Liability (GL), Commercial Liability or Comprehensive General Liability, CGL allows businesses to protect themselves against third-party claims if an accident occurs in the workplace or on business premises, as well as from one of their products or services.Unlike Professional Liability, CGL covers non-professional negligent acts that can occur anytime and anywhere on work premises. A CGL insurance policy also covers legal costs as well as damages if you are found liable.
What Does Commercial General Liability Insurance Cover?
Business operations vary from company to company. What all businesses have in common, however, is that they are liable if an accident occurs on their premises or from one of their products.
As such, CGL insurance consists of several risk areas that focus on common hazards which could prove costly if a claim is made. The main areas included in a typical CGL insurance policy include:
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Bodily Injury: Accidents such as slips and trips occur frequently in the workplace. If the accident occurred due to the negligence of the owner of the premises – such as a faulty piece of equipment or a wet floor with no sign – then they are responsible for any damages. CGL insurance will cover any legal expenses if a claim goes to court as well as damages or fines to the claimant. Other costs that may be incurred as a result of a bodily injury claim include loss of earnings, long-term nursing care, and compensation due to emotional and physical suffering. A claimant can be any third-party member such as a customer, contractor, visitor, external client or delivery worker.
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Property Damage: In the event of an accident, not only can someone damage themselves but also any property around them. The property included in a typical CGL insurance policy can include physical property like a building, a vehicle, or personal property. If the premises itself is damaged then CGL insurance will cover the costs of any maintenance and repair required. If a vehicle or personal piece of property is damaged then CGL insurance will also cover the costs of either the repair or replacement. Deliberate or intentional damage is not covered, however.
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Personal and Advertising Injury: In the event of negative publicity, either through defamation or a publicised negative incident, repairing a company’s image can be timely and costly. Certain incidents that require personal injury cover include libel, slander, false arrest, copyright infringement, malicious prosecution, use of another’s advertising idea, and wrongful eviction, entry or invasion of privacy. If a company’s reputation is damaged by any of the former, it may suffer a loss of earnings. Luckily, CGL insurance will not only cover the legal expenses during legal proceedings but any financial loss or extra expenses needed to repair the image of a company or brand.
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Medical Payments: Not all costs need to be given due to a court order. If someone has been injured or killed due to an accident on the insured’s premises then the company responsible for the incident may wish to cover the cost of medical bills without the need for legal action. These bills could include necessary and reasonable medical expenses, surgical procedures, transportation in an ambulance, hospital fees, professional nursing and funeral expenses.
Who Needs Commercial General Liability Insurance?
Anyone running a business is advised to take out CGL insurance. Whether you have business premises that receives visitors or are creating a product, CGL insurance will protect any business in any sector.Large international corporations, SMEs, factories, franchises, healthcare organizations, sports venues, hospitality and transportation depots are just a small range of businesses that CGL insurance would be appropriate for.
What Is Not Included In Commercial General Liability Insurance?
While CGL covers a wide range of general business risks, there are certain specific areas which are not included. This is either because these risks are not common to all businesses or that the risk areas are slightly more complex and require separate or higher coverage limits.
Typical risk areas which are either excluded from CGL insurance policies or must be bought separately are:
- professional services
- pollution and contamination
- liquor liability
- directors and officers (D&O) liability