General Liability Insurance (GLI) is a type of business insurance that provides coverage for a variety of liabilities faced by businesses. It is designed to protect businesses from financial losses arising from third-party claims for bodily injury, property damage, personal and advertising injury, and other covered liabilities. General Liability Insurance is a foundational component of risk management for businesses of all sizes.

Why Businesses Need Commercial Liability Insurance

Customer Interactions

A CGL policy is a necessity for a customer-facing business. Of course, you never set out intending to harm a customer, but accidents happen. If your actions lead to a customer being injured, your CGL policy will cover you.

Premises Liability

A CGL policy will also cover premises liability, which covers incidents that occur on your owned or leased property. If a customer comes into your store and slips and falls, that is a premises liability claim. This would be covered under the CGL policy.

Business Advertising

If your business does any advertising, you can easily find yourself in a lawsuit for libel or slander. These claims can arise out of something as simple as “We’re the best in town” or “The competition can’t compare” in an ad for your business. While these seem small and unlikely to result in a lawsuit, they very well could lead to a claim. The CGL policy would cover these claims under the business advertising portion.

You Have Employees

Having employees can open you up to many different types of claims. Apart from workers compensation coverage, which is under a different policy, you will need to protect your business from your employees’ actions. If, for example, the actions of one of your employees leads to physical damage to another person’s property, or even physical injury to another individual, your CGL policy will cover you and your business, preventing you from being on the hook for your employee’s actions.

You Have Large Equipment

With large equipment comes large disasters, as working with a bulldozer or other heavy machinery can easily lead to damage to another person’s property. Let’s say you are going to clear an area and debris falls, damaging someone’s roof. Your CGL policy will cover that damage.

You Produce a Product

If your business produces anything, you are opening it up for a products liability claim. A products liability claim occurs when your product leads to damage or injury of another person’s property or body.

CGL Coverages

Commercial general liability can cover a range of potential lawsuits. We will go over the core coverages, but if you have any specific questions, talk to one of our risk advisors for additional clarification.

Coverage A of a CGL policy provides protection from claims that relate to when your business’s operations, products, or completed work caused bodily injury or property damage. This coverage is typically provided on an “occurrence” basis, which means that you will be insured against incidents that happened during the policy period, regardless of when the claim is filed. In other words, if a claim is filed years later because an injury or damage was just discovered, you are still protected.

Bodily Injury Liability

This covers claims for a person’s physical injury, sickness, or disease that was caused by your business operations. It can also cover the death of that person if their injury, sickness, or disease led to that. Note that your business must be found legally responsible for causing the bodily injury.

Examples of bodily injury claims include:

  • A customer slipping and falling on a wet floor in your retail store
  • A construction worker getting injured while on-site for a project managed by your company
  • A visitor getting burned due to a faulty product manufactured by your business

Property Damage Liability

This provides coverage for damages to a third party’s property that was caused by your business operations, products, or completed work. “Damage” is defined as physical harm to a property, as well as the loss of use of that property.Examples of property damage claims include:

  • A contractor damaging a client’s property while performing renovation work
  • A manufacturer’s defective product causing damage to a customer’s property
  • A landscaper accidentally breaking a neighbor’s window while working on a project

It is important to note that Coverage A also includes a provision called the “products-completed operations hazard.” This means if either bodily injury and property damage claims arise after the work has been completed or product has been sold, you will be covered.

The Coverage A portion of a CGL policy is the most needed for your business, and where a majority of your claims will arise.

Coverage B: Personal And Advertising Injury Liability

Coverage B of a CGL policy protects you against claims that relate to personal and advertising injury. These are primarily allegations that your advertising or business activities harmed a person’s or business’s reputation or rights. Claims can be filed for libel, slander, invasion of privacy, copyright infringement, false arrest, and even improper eviction.

Examples of personal and advertising injury claims include:

  • A person suing your business for defamation due to a false statement made in an advertisement
  • A competitor claiming that your advertising materials infringe on their copyright or trademark
  • A customer accusing your business of violating their right to privacy by disclosing personal information without consent

Like Coverage A, Coverage B is typically provided on an occurrence basis. Regardless of when a claim is filed, you will be covered if the offense happened during the policy period.

Coverage C: Medical Payments

Coverage C of a CGL policy provides a no-fault coverage for medical expenses incurred by people who sustain bodily injuries on your premises or due to your operations. Another name for this is “goodwill coverage” because it pays medical bills without going through the rigmarole of determining who fault it was.

Coverage C is designed to help businesses address minor injuries quickly and efficiently, while avoiding litigation. It is important to note that Coverage C typically has a lower limit than Coverage A and does not require you to be found legally liable for the injury.Examples of medical payments claims include:

  • A customer sustaining a broken arm at your retail store and requiring immediate medical attention
  • A guest getting injured at an event hosted by your business and needs emergency medical treatment

4 Key Features of Coverage C:

  • No-Fault Coverage: The primary advantage of Coverage C is that it provides no-fault coverage for medical expenses: Your insurance company will pay for the injured person’s medical expenses without determining whether you are legally responsible for the injury. This can help businesses avoid lengthy (and expensive) legal disputes and maintain a good reputation with customers, clients, or other third parties.
  • Limited Scope: Coverage C is specifically designed to cover medical expenses resulting from bodily injuries. It does not cover property damage, lost wages, or pain and suffering. Furthermore, it does not apply to injuries sustained by employees, as those are typically covered under workers compensation insurance.
  • Payment Timeframe: Coverage C typically requires the insurance company to pay medical expenses within a specific time frame, usually one year from the date of the accident. This ensures that injured parties receive prompt reimbursement for their medical costs.
  • Per-Person Limit: Coverage C caps the amount the insurance company will pay for medical expenses for each injured person. It is essential for businesses to review their policy limits and consider purchasing higher limits if necessary, particularly if they operate in high-traffic or high-risk environments.

General Liability Insurance is a fundamental tool for businesses to manage risks and protect themselves from the financial consequences of liability claims. Understanding coverage needs, choosing appropriate limits, and working with insurance professionals are crucial steps for businesses to ensure they have adequate protection in place. Regular reviews and adjustments based on changes in business operations contribute to sustained risk management.

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