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General Liability

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What is ‘Commercial General Liability (CGL)’

A type of insurance policy that provides coverage to a business for bodily injury, personal injury, and property damage caused by the business’ operations, products, or injury that occurs on the business’ premises. Commercial general liability, or CGL, is considered comprehensive business insurance, though it does not cover all risks that a business may face.

“General Liability Insurance is an insurance policy that pays for a small business’s legal expenses when it is sued by non-employees. Lawsuits covered by General Liability Insurance usually include property damage, bodily injury, slip-and-fall accidents, slander, libel, copyright infringement, product liability, and more.
General Liability Insurance does NOT cover lawsuits alleging professional negligence (those are covered by Errors and Omissions Insurance). Here’s an example of Commercial General Liability Insurance in action. A landscaper puts down his hedge trimmer to run to his truck. It’s a hot day, and he has forgotten his water bottle on the front seat. After grabbing the bottle, he hears a scream and runs back to see his client’s child had played with the trimmers and dropped the blade on his foot, severing a toe in the process. The parents file a lawsuit for $150,000. General Liability Insurance pays for the landscaper’s lawyers in addition to the six-figure damages he owes the family.”

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BREAKING DOWN ‘Commercial General Liability (CGL)’

“Commercial general liability policies have different levels of coverage. A policy may include premises coverage, which protects the business from claims that occur at the business’ physical location during regular business operations. It may also include coverage for bodily injury and property damage that is the result of finished products. Excess liability coverage can also be purchased in order to cover claims that exceed the limit of the CGL policy. Some commercial general liability policies may have exclusions to what actions are covered. For example, a policy may not cover the costs associated with a product recall.

When purchasing commercial general liability insurance, it is important for the business to differentiate between a claims-made policy and an occurrence policy. A claims-made policy provides coverage over a specific time period, and covers claims that are made during that time period even if the claim event occurred at a different time. An occurrence policy is different in that it covers claims provided that the claim event occurred during a specified time period, and does not cover claims stemming from claim events that occurred before the policy came into effect.

In addition to commercial general liability policies, businesses may also purchase policies that provide coverage for other business risks. For example, the business may purchase employment practices liability coverage to protect itself from claims associated with sexual harassment, wrongful termination, and discrimination. It may also purchase insurance to cover errors and omissions made in financial reporting statements, as well as insurance that covers damages resulting from the actions of its directors and officers.”

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