Commercial Liability Insurance
What Is It?
Commercial General Liability insurance (CGL) is a standard liability policy for business organizations, of all sizes, to protect against liability claims for property damage and bodily injury. All businesses regardless of size should carry commercial general liability coverage. In addition to providing coverages for property damage and bodily injury, commercial general liability insurance also provides coverage for bodily injury and property damage arising from premises operations, products and completed operations and personal and advertising liability.
Commercial General Liability includes coverage for the following:
1) Property Damage liability: This provides coverage for the damages caused to someone else’s property when your company is at fault for the damages.
2) Bodily Injury liability: Provides coverage for a person’s injuries for which you are at fault. Sometimes will include legal defense if you are sued.
3) Premises operations: provides coverage for damage or bodily injury arising from the insureds premises or business operations while operating the business.
4) Products and completed operations: Provides coverage for the products or business operations away from the premises once the operations are completed. For example, this would cover a product that is sold to someone after completion at the insureds place of operations.
5) Personal and advertising liability (personal injury): provides coverage for the insureds advertising of goods and services, slander, copyright infringement, libel, misappropriation and invasion of privacy.
There are two types of commercial liability policies. Occurrence form policies cover damage that OCCUR during the policy period but can be filed after the policy expires. For occurrence policies the coverage limits rise each year, for example a $1 million policy would have coverage for $4 million after 4 years of renewals. A claims made policy pays for damages when a claim is placed against the insured during the policy period, regardless of when the claim took place. The exception to this is when there is a retro-active date on the policy. For claims made policies coverage will only be provided if the incident occurs during the policy period. Once the policy ceases either due to non-payment or underwriting reasons, there is no coverage provided even if the incident occurred during the policy term. For claims made the limits remain the same as the first year limit and do not increase after the policy renews each year. Claims made policies are usually less expensive in than occurrence form policies the first year as claims made has less exposure. However, as the policy renews claims made tends to increase inclemently annually and by around year five or six is about the same premium as the occurrence form policy
Why Is It Important?
Commercial General Liability is the most important coverage for a business to purchase. This coverage provides peace of mind for accidents and unexpected business happenings. Businesses, whether big or small, are at risk for being sued due to an accident on the business property or even an employee mistake. The cost for a lawsuit filed against a business owner can be very costly and if there is no Commercial Liability coverage it could cause a business to go under. The cost is small in consideration of what could be lost if there is no coverage.