A Quick Guide to Commercial General Liability Insurance (CGL)

Every year, at least 90% of U.S. businesses, both big and small, face some kind of litigation, with large corporations being particularly vulnerable to lawsuits. Some of the common reasons people sue businesses include, among others, bodily injuries, property damage, copyright infringement, slander, and defective products. Depending on the size, type, and the number of lawsuits, you can lose your business finances, incur penalties, and, in worst-case scenarios, serve jail time. For this reason, commercial general liability insurance is vital. Here’s some more information on this topic.

What Does Commercial General Liability Insurance Cover?

Commercial general liability insurance typically pays for the legal costs as well as any claims that may result if a third party sues your business. More specifically, this policy covers the following aspects:

  • Bodily Injury and Property Damage Liability

    Commercial general liability insurance will pay for the costs that result when your business operations cause bodily injuries or property damage to a third party. For instance, if a crane in your construction site accidentally drops a heavy object on a client’s car, crashing it in the process, the owner may sue you for the damages. Similarly, a pedestrian knocked down by one of your fleet vehicles can sue you for compensation. In such situations, the general liability policy will cover the resulting losses.

  • Medical Payments

    If someone suffers bodily injuries within your business premises or because of your business operations, they can file a claim with your insurer, meaning your business would not have to cover the resulting medical costs.

  • Personal and Advertising Injury

    The policy also covers liability costs resulting from events that may damage a third party’s reputation or cause them mental agony. These include, among others, slander, false arrest, libel, malicious prosecution, invasion of property, wrongful eviction, and copyright infringement.

Purchasing Commercial General Liability Insurance

Most insurance companies allow business owners to purchase commercial general liability insurance as stand-alone policies, as endorsements on the business owner’s policies (BOP), or as part of the general commercial insurance policy. Even so, a stand-alone policy is ideal if you run a high-risk business such as those in the construction, transportation, and agricultural industries. Take note that your commercial general liability insurance will only provide coverage up to the limit you carry. With this in mind, consider adding a commercial umbrella insurance policy to supplement your liability coverage.

Other Liability Coverages to Consider

For full liability coverage, consider purchasing the following commercial liability insurance policies depending on the type of business you operate, especially because they are not covered under commercial general liability insurance.

  • Liquor Liability – This policy is necessary if you run a club, a liquor shop, or a restaurant that serves alcoholic drinks. It provides coverage in case a patron in your premises injures others or damages a third party’s property due to intoxication.

  • Cyber Liability – In case a data breach or cyberattack in your business results in the exposure of your client’s sensitive information, cyber liability coverage will pay for the legal costs and claims.

  • Directors and Officers Liability – If you are a director or officer in a non-profit or for-profit organization, this policy protects you against alleged wrongful acts such as omission, misstatement, and breach of duty.

  • Pollution Liability – This coverage is essential for businesses whose operations involve releasing substances or by-products that can harm the environment.

To protect your business from liability risks, ensure you carry the right commercial general liability insurance coverage. For more information related to commercial general liability insurance, contact our experts at Spotlight Insurance Agency today!