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Commercial General Liability Insurance

A business benefits from adequate commercial general liability coverage, sometimes referred to as “CGL” insurance. Such a policy protects if someone is injured at the place of business. It also covers damage or injuries caused by company employees at a customer place of business or home. Typically, there are four basic categories of coverage in a CGL policy. These include: bodily injury; property damage; personal injury protection; and advertising injury.

Protection is provided for bodily injury and property damage arising from occurrences. In addition, if personal injury and advertising injury are included and covered, there may be protection for unintentional defamation, wrongful eviction or advertising injury.

CGL policies also cover the cost to defend or settle claims, even if the claims are fraudulent. This is of benefit in addition to the coverage provided, that prevents or limits exposure of expending money for attorneys and litigation costs.

Insurance Every Busienss Should Have

In short, CGL policies are the first line of defense for certain types of injuries or damages caused while conducting normal course business. Often a CGL policy is combined in what is known as a  business owner’s package or “BOP”. In this type of package, typically there is additional coverage for property insurance not covered under the CGL policy.

CGL policies typically contain an exclusion for professional liability, also known as errors and omissions. If performing professional services, businesses may be subject to liability for negligent acts, errors, and omissions. As such, professional liability coverage is required. Unless this type of coverage is limited and added by an endorsement on a CGL policy, it typically does not exist in that form, and must be separately insured. If professional judgments or recommendations are made in the normal course of business, inquire regarding a professional liability policy or an endorsement on a CGL policy to cover such recommendations, judgments, or opinions.

Isurance is not a Guarantee of Quality

Perhaps most misunderstood about the CGL policy is that it is not intended to be a guarantee of the quality of a businesses’ products, services, or work. It will typically cover business for damagers caused by defective work, but not damages for defective work. A roofing contractor purchases a CGL policy and during the policy term they install a roof on a school library which then leaks. The roof needs to be removed and replaced and there is significant damage to the books, furnishing, drywall and carpeting in the school library.   Typically, the CGL policy will the damages to the books, carpeting, furnitre, and walls, but not for replacing and and installing the roof that was potential installed negligently.

A CGL policy is a good step in protecting a business and its assets. Understand the coverage and determine whether or not the business may need to insure over other risks. 

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