February 4, 2022

Commercial General Liability (CGL) Insurance Policy

Commercial General Liability (CGL) Insurance Policy

Commercial General Liability (CGL) Insurance is the most common type of commercial Liability Insurance. It offers fundamental protection to businesses in the event of third party property damage or bodily injury. It provides “general”, as opposed to specific coverage, and is often bundled together with other liability policies.

This kind of insurance indemnifies a business’s legal liability towards third parties for physical injuries, accidental death, or property damage suffered by them on business premises or caused by business activities .  This policy covers expenses like attorney fees in the event of a lawsuit, medical expenditure of the injured third party, and payable damages.

Commercial General Liability Insurance is mandatory for organizations like hospitals, restaurants, manufacturers of hazardous chemicals, etc. This insurance extends coverage to owners of a company, its directors, managerial staff, or anyone involved in business activities.

This policy is also known as Comprehensive General Liability Insurance because it offers both public liability as well as product liability. It broadly provides protection for a company’s legal liability in the following cases :

  • Third party bodily injury - If a customer gets hurt on your business premises due to slipping, tripping or falling, their medical expenses will be covered
  • Third party property damage - this includes damage to third party belongings. Here, the replacement, repair or renovation costs will be covered
  • Pollution - occurrence of pollution caused by or arising out of or in connection with the insured business
  • Advertising injury - this includes intentional or unintentional copyright infringement of third party content including photos, logos, taglines, used in advertisement
  • Reputational harm - this included claims of libel or slander leveled against the insured business or its employees or directors
  • Product related issues - this includes claims filed by customers for any harm caused due to a defect in the business’s products or a deficiency in the business’s directions for the use/storage of their product

General liability Insurance covers a business’s basic liability to third party individuals. However, it does not cover all the risks a business may face. Some exclusions are :

  • Damage to a business’s own property or product
  • Professional liability
  • Any property damage, bodily injury or death arising out of the ownership or use of aircraft, aircraft products, motor vehicles, or watercraft
  • Damages caused due to biological agents or chemicals like asbestos
  • Business liability arising out of contractual agreements
  • Damages arising out of employment related activities like claims of discrimination, breach of contract, etc.
  • Intentional harm or property damage
  • Damages caused by nuclear energy, pollution, war or terrorism
  • Progression of known bodily injury or property damage
  • Any loss, cost, or expense due to recall of products
  • Damages resulting from unapproved goods or products
  • Workers’ compensation or similar laws

There are several extensions under this policy that can be opted for on payment of additional premium. Some of them include :

  • Medical expenses coverage - under this extension, third party medical expenses that arise due to an accident on business premises or due to its products, activities or services can be covered
  • Sudden & accidental pollution liability - this covers third party claims of injury or property damage as a result of a pollution event that is ‘sudden and accidental’
  • Damage to premises rented by the business - this covers the business’s liability to their landlord due to damage to rented property
  • Vendors’ endorsement - this extension provides coverage to the vendor or seller who sells the insured company’s products to the end consumer
  • Transportation liability cover - this covers bodily injuries or property damage arising out of the transportation of mobile equipment by a vehicle owned, operated, or rented by the insured business
  • Personal injury liability coverage - this extension covers the business’s personal liabilities such as false arrest, detention, imprisonment or malicious prosecution

General liability insurance forms the base of a business’s liability insurance package. It’s limited coverage is enhanced by adding other liability policies like Errors and Omissions, Directors’ and Officers’ liability, Employee liability, among others. Regardless, General Liability Insurance is an integral tool when it comes to safeguarding a business’s liabilities. Its general nature makes it ideal for every business, irrespective of their location, industry, or growth stage.

Other liability policies like Professional Liability Insurance, and Workmen's Compensation Insurance are also indispensable for many businesses. Learn more about different types of Liability Insurance policies

Opinions, conclusions and statements of intent expressed in this article are that of the author and Verak does not accept liability for the views expressed unless confirmed by an authorized representative of the Company independently of this communication.