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Commercial general liability Insurance
Commercial General Liability Insurance is commercial insurance coverage that is designed to mitigate financial risks to your company. Financial risks can arise from lawsuits and litigation against your business for a number of potential hazards. Commercial general liability insurance, or CGL, pays for damages and claims that come about primarily due to bodily injuries and property damages. Effectively, it keeps your company from going bankrupt due to legal defense bills if a customer sues you.
Commercial General liability insurance protects you from the most common types of lawsuits that can arise from customers or other hazardous events. It’s the most popular type of commercial insurance coverage because it covers all of the most likely events you may encounter. While your business insurance policy can vary, general liability coverage normally focuses on four specific areas of protection:
- Bodily injuries or property damages to customers
- Personal Injury Liability
- Medical Payments
- Tenants Legal Liability
Bodily Injury or property damages to customers
General liability provides your company with legal and financial protection if a customer is ever subjected to bodily injuries at or because of your business. Bodily injuries can include physical injuries such as when a customer slips on a newly waxed floor. It can also include sickness or disease that is attributed to your company, and mental anguish or suffering.
Effectively, anyone or anything that is associated with your company can cause bodily harm to a client or customer. Your office or retail space, your employees, the work you provide and the products you sell. When a customer receives physical harm or damage, your company may be legally liable to pay for those damages.
Commercial general liability provides your business with legal and financial protection if your company is responsible for damages caused to someone else’s property. For example, if one of your employees accidentally punctures a gas pipe while installing a swimming pool and it causes a fire on the customer’s property, your company may be legally liable for those damages. General liability provides protection for property damages that happen on your business premises as well.
Products and Completed Operations
If your company sells products or provides services, the goods and services you provide can put you at risk of legal actions. For example, if your company sells swimming pool water pumps and a pump is found to be defective, your company could be sued by a client if they are injured because of the defective pump. Likewise, if an employee wires the pump wrong when he is installing it, and that results in injuries or damages to your customers, your company can be sued for the damages caused by the operations your employee completed.
Product liability can include defects in your product design. For example, if you produce kitchen knives and one model’s design has a flaw that causes the blade to break and cut customers; your company can be liable for that design defect.
Flaws in production or manufacturing are also covered by product liability. Toys from China for example, have had claims against the manufacturers because of lead paint or unsafe chemical usages in the products.
Improper labels or Instructions can also create liability suits against your company. If you sell a hot cup of coffee for example, and the product is not clearly labeled with warnings about burn potential, a customer may injure themselves when they spill it.
Product and completed operations coverage can pay for the customer’s legal fees, lost income, medical costs and pain and suffering.
Keep in mind that product liability coverage is essential even if your company does not manufacture products. Legal actions can arise from products that you sell, even if you were not the original manufacturer.
Products and completed operations coverage includes products you manufacture or sell and services that you provide, regardless of where you create or sell them, as long as they are not specifically excluded on your commercial general liability policy.
The property damage coverage portion of your general liability policy can include protection from damages that are caused due to mobile equipment and vehicles your company uses. If for example, your company operates snow removal, street cleaning or road maintenance machinery that is not more than 1,000 pounds, general liability can provide protection for damage claims that result due to operating that machinery. For example, if your company provides snow removal services and an employee knocks down a mailbox while performing his job, your commercial general liability insurance may cover the damage claims or suits generated by the mailbox owner.
Bodily injury and property damage coverage protects you with your contracted obligations as well. If you have assumed responsibility for a customer or property in writing through a contract, your commercial general liability coverage will take care of damages and restitution if the need arises.
Examples of contracts that may be covered include elevator maintenance contracts, lease of premises, and a license or easement agreement. Restrictions apply to contractual liability coverage, so be sure to speak with one of our commercial insurance specialists to determine your specific business policy needs.
The bodily injury and property damage portion of your commercial general liability usually lists specific things that are excluded from your policy. While these exclusions can vary based on the type of business you operate and the type of coverage you acquire, the following items are commonly excluded:
- Punitive Damages
- Intentional injuries or property damage
- Commercial automobile injuries and damage
- Injuries to employees
- Damages to employee property
- Damage to property you own, rent or occupy
Personal and Advertising Injury
Personal and advertising injury protection differs from bodily injuries and property damages in that no physical harm comes to a person or their property directly. This part of your general liability insurance coverage instead protects you from lawsuits and legal claims that arise due to claims of damages to a person’s character or reputation. Examples include libel, slander, customer discrimination and similar accusations. If your company is accused of invading a customer’s privacy for example, this section of your general liability coverage can take care of your company’s legal defense costs and pay settlements or judgments. Personal injuries can include numerous other claims such as wrongful eviction and false arrest as well.
Advertising injury claims can include claims made by third-party individuals or groups. Advertising liability may involve claims of slander or libel, copyright infringements and trademark or trade dress claims among other things.
If, for example, your company creates an advertisement that uses a photo of a person and that photo does not have the proper model release, your company could be sued for using the photo in its advertisement. If your company did not have knowledge of the infraction, the advertising injury portion of your commercial general liability policy may cover the damages. If you created the advertisement with full knowledge that you did not have the proper authorization to use the photo however, advertising liability will not cover the damages.
Knowingly violating the rights of others like this is one exclusion. Others include knowingly publishing false information, criminal copyright or trademark infringement, and breaches of contract.
Speak to one of our commercial insurance specialists to determine the full spectrum of coverage this portion of your policy offers.
The medical payments section of your commercial general liability insurance is designed to handle minor accidents and injuries. Sometimes this section of your commercial insurance can help you avoid expensive legal processes and settlements, because it allows your company to pay for small medical expenses that wouldn’t normally trigger a lawsuit.
If a customer twists their ankle on your newly waxed floor for example, your medical payments coverage can pay the customer’s doctor bill. This can help you maintain goodwill with the customer and prevent a full-fledged lawsuit and large settlement payment.
Medical payments coverage can also pay for incidents that occur where your company would not have been held legally liable. It provides for the cost of first aid, and follow-up medical care or expenses for up to three years after the injury happened.
If your company rents or leases retail or office space, tenants’ legal liability coverage helps protect you in the event that you cause property damages.
Damage to Premises You Rent or Occupy
When you rent or lease your business space, accidents can arise that you are found legally liable for. If for example, your employees overload an electrical socket and cause a fire, your company would have to pay the damages to the building. If your company causes other damages such as smoke damage, water damage due to setting off the sprinkler system accidentally, explosions or other otherwise, tenants’ legal liability can pay for the damages that occurred.
Tenants’ liability coverage may be required by the building owner before your company is allowed to rent or lease the space. The policy does not cover any damages or destruction that is found to be intentional. It also does not cover your personal or business assets such as furnishings or inventory. It simply pays for damages to the building if you are found to be at fault for those damages.
General Liability Exclusions
Your commercial general liability insurance policy will list specific events and incidents that it will not cover. These exclusions are generally based on the level of risk involved, and as high risk incidents they require different or additional coverage levels. Examples include:
- Pollution – If your company is found liable for property damages or bodily injuries that were caused by pollution. Pollution may be caused by your employees, your products, or your company’s operations and activities.
- Nuclear Material – General liability normally excludes coverage for injuries or damages caused by using nuclear materials.
- War – Bodily injuries and property damages that result from war are generally excluded.
- Professional Liability – Errors and Omissions by licensed professionals such as physicians or accountants.
- Data Liability – If data is misused, distributed or destroyed, general liability normally does not protect your company from these events.
- Terrorism, Fungus or Asbestos – Property damages and bodily injury caused by these items is normally excluded from commercial general liability insurance policies.
Additional coverage endorsements
To provide protection for your company in areas that are specifically excluded from your commercial general liability policy, you’ll want to add other coverage options to create an all-around package of protection.
OTHER BUSINESS COVERAGES
Business Owners Policy - or BOP, protects the physical assets of your company. It can protect you from losses of physical assets such as buildings, structures, furnishings and inventory. It also pays for losses caused by employee dishonesty, electronic data corruption, and valuable papers destruction.
Commercial Auto Insurance – pays for damages to people and property when those damages are caused by auto accidents involving your commercial vehicles. This business insurance can also protect your company from losses when accidents are caused by uninsured motorists, when hit-and-run incidents occur, or when your vehicle is stolen or vandalized.
Workers Comp Insurance – is mandatory by law when you have employees. This coverage protects you from having to pay the expenses when an employee is injured on the job. Workers comp pays the employee’s emergency or ongoing medical care bills, prescription medication costs, and temporary or permanent disability.
Professional Liability Insurance – is also known as errors and omissions. Certain types of licensed professionals can be sued for professional mistakes. Medical malpractice suits are a common example. When, in your professional activities, you make a mistake or omit critical information that causes your client financial loss, professional liability can cover the damages.
Surety Bonds – provide contract guarantees. Often used by contractors and suppliers, a surety bond gives your customer a guarantee that you will fulfill the obligations that are specified in the contract you sign. If you fail to fulfill the contracted obligations, the surety bond will pay your customer for damages.
Umbrella – coverage provides protection for catastrophic events. When bodily injury or property damages exceed the protection limits of your general liability policy, umbrella insurance can cover the excess.