A Commercial General Liability (CGL) policy protects your business from financial loss should you be liable for property damage or personal and advertising injuries caused by your services, business operations, or your employees. covers unprofessional negligent acts. Understanding this coverage is an important first step in managing cgl risks.
These are just a few examples of situations in which your company could be responsible for paying various costs, such as medical and legal expenses, as well as compensatory and punitive damages:
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- While visiting your business, a customer trips on loose flooring and is injured.
- An employee at your painting or construction business accidentally lets the water run, causing extensive damage to a customer’s home.
- A class action lawsuit was filed against his business, alleging that the advertisements constituted misleading information.
- defamation
- slander
- false arrest
- infringe someone else’s copyright
- malicious prosecution
- use of someone else’s advertising idea
- improper eviction, entry or invasion of privacy
what does commercial general liability insurance cover
A cgl insurance policy will generally cover the costs of your legal defense and will pay on your behalf for all damages if you are found liable, up to the limits of your policy. cgl coverage is one of the most important insurance products, due to the negative impact a lawsuit can have on a business and because such liability lawsuits occur so frequently. standard cgl includes:
coverage a: bodily injury and property damage liability
bodily injury and property damage coverage provides protection against losses arising from the legal liability of the insured for bodily injury or damage to the property of others arising from unprofessional negligent acts or from liability arising from their premises or business operations. Mental injury and emotional distress may be considered bodily injury, even in the absence of physical bodily harm.
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Excludes Workers’ Compensation and Employment Practices Liability insurance, but can be purchased as separate policies. additionally, pollution liability is excluded and can be purchased as an endorsement. however, this coverage is very limited and high-risk businesses should consider purchasing a separate pollution liability policy. liquor liability, professional liability and other risks may also be excluded. An insurance professional can help you determine the right endorsements for your type of business.
coverage b: personal and publicity damages
publicity and personal injury liability protects an insured against liability arising from certain crimes, such as:
coverage c: medical payments
Limited coverage for medical payments includes payments for injuries sustained by a non-employee caused by an accident that occurs on the insured’s premises or while exposed to the insured’s business operations. medical payments coverage can be activated without legal action. this provides quick settlement of small medical claims without litigation. is included in the cgl policy and pays all necessary and reasonable medical, surgical, ambulance, hospital, professional nursing and funeral expenses for a person injured or killed in an accident occurring on the insured’s premises or arising out of business operations. there is no legal defense or liability coverage, as there is with bodily injury and property damage (coverage a) and personal and advertising liability (coverage b), as the coverage is provided at no fault.
buy commercial general liability insurance
You can buy commercial general liability insurance as a stand-alone policy, as part of a business owners policy (bop), or as part of a commercial package policy (cpp). check with your insurance professional about what kind of coverage you need and how much. If your general liability, bop, or cpp policy doesn’t provide enough coverage, you may want to consider purchasing a commercial franchise (umbrella) policy, which will provide additional protection.
additional liability coverages to consider
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Depending on your type of business, you may want to consider additional liability coverage that is not part of commercial general liability insurance. Talk to your insurance professional, risk manager, and/or legal advisor about the types of coverages you may need. The following is not exhaustive, but key types of insurance to consider include:
responsibility of directors and officers
Directors and Officers Liability Insurance protects past, present and future directors and officers of for-profit and nonprofit businesses from damages resulting from actual or alleged wrongful acts they may have committed in their positions. The policy provides protection against any actual or suspected error, inaccuracy, omission, misrepresentation or breach of duty. In addition, some policies extend the same coverage to employees.
liquor responsibility
Alcoholic beverage liability insurance is business coverage that protects your business against loss or damage claimed as a result of a customer of your business getting drunk and injuring himself or others. If your business manufactures, sells, serves, or facilitates the use or purchase of alcohol, your business likely needs this coverage. Alcoholic beverage liability coverage can be sold as an add-on to a commercial liability policy or as a stand-alone policy. but, if you don’t purchase this additional coverage, your standard commercial general liability policy does not protect your business against claims related to alcoholic beverages.
liability for contamination
This type of coverage provides industrial, commercial, and agricultural property owners, managers, and developers with a wide range of pollution liability protection for gradual, as well as sudden and accidental, first-party, and third-party environmental liabilities. it also protects assets from unforeseen environmental exposures that could have a material impact on earnings. Plus, it protects against unforeseen pollution hazards that can result in bodily injury, property damage, or pollution cleanup costs.
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