One common question many business owners ask is “what is commercial general liability insurance?” Also, they want to know what it’s all about and whether they need it. The truth is, commercial general liability insurance is an important part of an insurance plan. This is because it can help cover claims that your business has caused, which may be bodily harm or property damage. However, you can get commercial general liability insurance as a customized policy or bundle it with other key coverages. We’re here to help you understand what kind of insurance coverage your business may need. So, whether it’s learning about the meaning of commercial general liability insurance, the cost, coverage, or help to get a quote, we’re here for you.
What Is Commercial General Liability (CGL) Insurance?
Commercial General Liability (CGL) policy is a standard insurance policy assigned to business organizations to protect them against liability claims. Hence, the protection for liability claims includes bodily injury (BI) and property damage (PD). These moreover, arise out of premises, operations, products, and concluded operations; and advertising and personal injury (PI) liability.
The CGL policy was introduced in 1986 and displaced the general liability policy. This insurance is also known as general liability insurance or business liability insurance.
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What Is the Difference Between Commercial General Liability and General Liability?
There isn’t a difference between commercial general liability and general liability insurance as both terms refer to the same insurance.
Understanding Commercial General Liability (CGL) Policy
Commercial general liability policies have different coverage levels. So, a policy may include premises coverage, which protects the business from disclosures that occur on the business’s physical location on regular business operations. There may also be coverage for personal injury and property damage as a result of products or services made elsewhere.
Excess liability coverage can be purchased to cover claims that exceed the limit of the CGL policy. However, some commercial general liability policies may discriminate in activities covered. For instance, a policy may not cover the costs associated with a product recall.
When purchasing commercial general liability insurance, the business needs to distinguish between a claims-made policy and an occurrence policy. A claims-made policy provides coverage for whenever there is a claim, regardless of the time of occurrence. An occurrence policy is different as it covers claims where the claim event occurred during the policy period. It provides coverage even when the policy has expired.
Additionally, businesses may also purchase policies that provide coverage for other risks to the business. For instance, the business may purchase employment practices liability coverage to protect itself from claims related to sexual harassment, wrongful termination, and discrimination. It may also purchase insurance to cover deficiencies and non-compliance with financial statements, as well as coverage for losses, resulting from the actions of its directors and officers.
Special Insurance Considerations
Depending on the needs of the company, the company may need to name a company or other person as “additional insured” under a commercial liability insurance policy. This is common when one company enters into a contract with another company. For example, if an automobile repair garage enters into a contract with ABC Co. to provide cleaning services for the facility. ABC Co. may require the garage owner to add ABC Co. as “additional collateral” on their CGL coverage.
What Does Commercial General Liability Insurance Cover?
Commercial general liability insurance coverage extends to claims that your business caused like:
- Damage to someone’s property
- Somebody to get injuries
- Self-harm, such as depression and anxiety
- Advertising harm
These kinds of claims are more common than you think. In fact, they can occur during normal business activities.
So. if a customer sues you, commercial general liability insurance coverage can help pay for:
- Attorney and witness charges
- Evidence and documents collection
- Medical fees
- Crisis
- Accommodations
These charges can add up, and your costs may increase if you take a longer time to resolve the matter. Even if your client drops their lawsuit, you’ll still have legal costs, such as attorney fees. Hence, commercial general liability insurance is necessary. This is because, without it, your business and your assets are at financial risk.
Groups of CGL Policy
So, there are three groups of CGL policies known as Coverage A, B, and C in the insurance world.
Here’s a brief breakdown of the groups:
#1. Coverage A: Bodily Injury & Property Damage
- Bodily injury typically includes physical injury, illness, or disease, including incidents that lead to death.
For Instance: An electrician is working on a building and falls off his ladder, resulting in a bodily injury claim.
- Property damage, as it relates to general liability, is defined by the educational service International Risk Management Institute (IRMI) as “physical harm to tangible property including resulting loss of use and loss of tangible property use that has not been physically harmed.
For Instance, An electrician’s ladder falls over and shatters a window, resulting in a property damage claim.
#2. Coverage B: Advertising & Personal Injury
Under general liability, in conjunction with appropriate CGL policies, advertising, and personal injury constitutes a category of insurable offenses. They can produce harm other than bodily injury.
Examples of claims covered by advertising and personal injury liability include false arrest, detention, or imprisonment. It also includes unlawful prosecution; wrongful eviction; slander; libel; invasion of privacy; and misuse of advertising ideas.
#3. Coverage C: Medical Payments Coverage
Medical bill coverage is a type of liability coverage that ensures medical or funeral expenses are paid to the injured party. This is regardless of liability, in the event of bodily injury or death sustained by accident under the conditions specified within the policy.
Example of Commercial General Liability Insurance (CGL)
Some examples that may require Commercial General Liability coverage include the following:
- A customer enters his business area where the floors have recently been washed and polished. This makes the floors very slippery. So, the customer then slips on the floor and breaks his leg.
- One of your electrical company employees visited a house for electrical work and accidentally caused a fire in the customer’s house.
- The ad you place leads to a person who is said to be corrupt or wild.
Commercial General Liability (CGL) Insurance Cost
Your business insurance needs are different than others. Hence, your cost for commercial general liability insurance may also vary. So, several factors can affect your general liability insurance cost. They include:
#1. Type of business:
The more risk your business faces, the higher your costs or rates can be.
#2. Location:
Areas with less population may face lesser risk. Hence, this can also reduce your commercial general liability cost.
#3. Revenue:
The higher the annual revenue or sales of your business, the more you may pay for coverage.
#4. Coverage limits:
If you choose a higher limit for your policy, your rate will increase.
Businesses that need Commercial General Liability Insurance
Commercial general liability insurance is important for businesses of all sizes. Hence, it can help:
- Sole business owners
- Small business
- Big companies and coporations
These coverages also extends to many industries, including:
- Beauty shops
- Independent contractors
- IT firms
- Marketing and consulting firms
- Photography studios
Additional Liability Coverages to Consider
Remember that commercial general liability insurance doesn’t cover all claims. As a result many companies choose to get other liability coverages. So, this helps guard against risks not treated by CGL coverage. Some other types of insurance you can choose from include:
#1. Professional liability insurance
This insurance policy helps to cover claims that you made a mistake or omission in your professional activities.
#2. Management liability insurance
This insurance policy helps to protect your managers and employees from liability risks.
#3. Employment practices liability insurance
This insurance policy helps to help cover claims of discrimination, wrongful termination, harassment.
#4. Workers’ compensation insurance
This is to help your employees recover from a work-related injury or illness.
How does commercial general liability insurance protect my business?
Commercial general liability insurance (CGL) protects your business from financial losses due to third-party claims of bodily injury, property damage, and personal or advertising injury. It can cover costs associated with settlements, judgments, and legal defense fees.
What is commercial general liability insurance?
Commercial general liability insurance (CGL) is a type of insurance that provides financial protection for your business in the event of third-party claims of bodily injury, property damage, personal or advertising injury, and other covered losses.
How can I purchase commercial general liability insurance?
Commercial general liability insurance can be purchased through an insurance agent or broker, or directly from an insurance company. It is important to compare coverage and pricing from multiple sources to find the best policy for your business.
How do I know if I have enough commercial general liability insurance coverage?
It is important to assess the potential risks and exposures faced by your business and to determine the amount of coverage needed to protect your assets. Your insurance agent or broker can help you determine the right amount of coverage for your specific business needs.
How do I file a claim under my commercial general liability insurance policy?
To file a claim under your commercial general liability insurance policy, you should contact your insurance company or agent as soon as possible to report the incident. You will be required to provide details about the incident and any related expenses or losses.
How does commercial general liability insurance affect my business’s reputation?
Having commercial general liability insurance in place can demonstrate to your clients and customers that you take your responsibilities seriously and are committed to protecting their interests. This can help to enhance your business’s reputation and increase trust in your brand.
Can I sue my commercial general liability insurance company if they deny my claim?
If you believe your commercial general liability insurance claim was wrongly denied, you may have the option to file a lawsuit against the insurance company. However, it is important to understand the terms and conditions of your policy, as well as the relevant laws and regulations, before taking legal action.
Key Take Away
Depending on your type of business, an insurance broker may advise you to purchase both general and general liability agreements. However, you can choose to use the two different carriers. So, if there is a claim against your business, one insurance company may try to bypass the other. So, to avoid this competition and focus on the problem at hand, buy both from the same insurance company.
Commercial General Liability Insurance FAQs
What does a commercial general liability policy cover?
A Commercial General Liability (CGL) coverage protects your company from financial loss if you are held liable for property damage or personal and advertising injury as a result of your services, business activities, or employees. A customer gets hurt after tripping on loose flooring while visiting your establishment.
How much does commercial general liability insurance cost?
Small business owners may expect to pay about $63.53 per month on average for Public Liability insurance. According to our findings, over 62 percent of small firms pay less than $50 per month for Public Liability insurance, while approximately 25 percent pay between $51 and $100 per month.
What is the difference between general liability and commercial general liability?
General liability insurance protects you against claims that your company caused physical harm or property damage. It may also shield you if you are sued for advertising injury. Commercial property insurance protects your company’s physical location as well as its equipment, whether you own it or lease it.
Does every business need public liability insurance?
You are not required by law to obtain public liability insurance, but if you operate a business, you will most likely require it. Public liability insurance covers your expenditures if someone else sues your company – and without it, unanticipated legal bills may ruin your company.
