Commercial General Liability (CGL) Policy Explained

What is CGL Insurance?

Commercial General Liability Insurance is a standard insurance policy issued to businesses and organizations to protect them against the following liability claims arising out of premises, operations, products, and completed operations:

  • Bodily injury (BI)
  • Property damage (PD) 
  • Personal injur
  • Advertising injury

The CGL policy insurance was introduced in 1986 and is often referred to as a “comprehensive” general liability policy.

Why is Commercial General Liability Insurance Needed?

Common law, which applies in all provinces in Canada except Quebec (where they operate under Civil Law), has established that business owners owe a duty of care to the public regardless of the type of business they operate. Unfortunately, accidents happen, and injured people or parties may allege the following three things:

  1. A duty of care was owed
  2. That duty of care was breached
  3. Damages and/or injuries were incurred

When the above conditions are met, people, parties, and/or their lawyers will often allege that a business has been negligent and is responsible for compensating them for their damages

Demands for compensation can come in written and/or verbal format and can be made by the injured party directly or by a lawyer representing the injured. This is commonly known as personal injury law, and in this area of law, lawyers will typically work on a “contingent” basis, which means the injured party pays nothing upfront. The lawyer only gets paid if they receive an award or settlement from the organization they allege is at fault.

Who Needs Commercial General Liability Insurance?

CGL insurance is essential for any business, from small startups to large corporations operating in various industries. This insurance coverage protects against financial losses from third-party claims of advertising injury, bodily injury, and property damage. 

Here are some signs you need CGL insurance:

  • Your business has a physical location (including a home office)
  • You or your employees interact with clients or customers face-to-face.
  • Your company markets its products or services, exposing you to potential claims of false advertising or copyright infringement.
  • You participate in trade shows or events where your business could accidentally cause harm to third parties.
  • Your business operations involve manufacturing, distributing, or selling products that could harm users.

What Can CGL Insurance Cover?

CGL coverage can protect businesses against common liabilities they may face during operations, including:

  • Bodily Injury To Third Parties: This covers medical and legal expenses resulting from bodily harm, sickness, or disease, including death, from your business operations. 
    • For example, a customer slips in your store and breaks their hip.
  • Property Damage To Third Parties: Damage caused to property that isn’t yours.
    • For example, a contractor accidentally damages the building next to the one he is working on.
  • Products Liability: Liability for bodily injury or property damage incurred by a merchant or manufacturer due to a defect in the product sold or manufactured.
    • For example, a customer becomes sick after eating at a restaurant.
  • Completed Operations: Work of the insured that has been completed as called for in a contract, work completed at a single job site under a contract involving multiple job sites, or work that has been put to its intended use.
    • For example, a plumber installs a new toilet, and it begins to leak and damages the contents of the room below.
  • Tenant Legal Liability: Tenant accepts responsibility for damage they may cause to the building they rent or lease from a landlord. 
    • For example, an asset management company employee leaves a candle burning at their desk overnight, which catches fire and burns down the entire office tower.

How Much Does Commercial General Liability Insurance Cost?

The cost of a commercial general liability policy varies depending on several factors, including: 

  • The level of risk associated with your industry
  • The size of your business (both in terms of revenue and the number of employees)
  • The amount of CGL insurance coverage needed
  • The business’ claims history and more

For example, a small, home-based business might pay a few hundred dollars annually, while a larger company operating in a higher-risk industry could pay thousands yearly. 

It’s essential to get a tailored quote from an insurance broker, like ALIGNED Insurance, to understand the specific costs for your business.

What is the Difference Between CGL and Professional Liability Insurance?

The primary difference between CGL insurance and Professional Liability insurance lies in the types of risks they cover. CGL insurance provides coverage against bodily injury, property damage, and advertising injury that a business might cause to third parties. It’s broad in scope, covering incidents that could occur during the everyday operations of a business, such as a customer slipping on a wet floor in a store.

Professional Liability insurance, on the other hand, protects businesses against claims of negligence, mistakes, or failures in the professional services they provide. This type of insurance is essential for companies that offer advice, consultation, or services where errors could lead to significant financial loss for their clients. Commonly known as Errors and Omissions (E&O) insurance, it covers legal costs and settlements or judgments that result from claims of professional wrongdoing.

Other Business Coverage Options to Consider

In addition to getting commercial general liability coverage to protect your business from claims against you for bodily, personal, and advertising injury, there are a few other business insurance coverage options you may require: 

  • Directors & Officers Liability Insurance: Protects the personal assets of company directors and officers if they are sued for wrongful acts in managing the company.
  • Commercial Property Insurance: Covers loss or damage to company buildings, contents, and inventory due to events like fire, theft, and natural disasters.
  • Equipment Breakdown Insurance: Provides coverage for repairing or replacing business equipment that breaks down, excluding wear and tear.
  • Commercial Auto Insurance: Offers protection for vehicles owned or used by a business, covering damages and liability issues arising from their use.
  • Cyber Insurance: Shields businesses from financial losses from cyber incidents, including data breaches, cyberattacks, and system hacks.

Align Your Business With Appropriate Insurance Coverage With ALIGNED Insurance

The team of experienced brokers at ALIGNED Insurance is ready to help you get the coverage your business needs to be protected against any unforeseen risks.

We work with thousands of insurance providers to ensure we get you an insurance policy that aligns with your business at a price you can afford. 

Contact us or get a quote today.

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