Commercial General Liability Insurance Coverage 101

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Commercial General Liability Insurance Coverage 101

A standard insurance policy is issued to businesses & organizations to protect them against liability claims for bodily injury (BI) and property damage (PD) arising out of premises, operations, products, and completed operations; and advertising and personal injury (PI) liability.

Why Is Commercial General Liability Insurance Coverage So Important?

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 that the business 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 and the lawyer only gets paid if they receive an award or settlement from the organization they allege is at fault.

What’s Part Of Commercial General Liability Insurance Coverage?

Typically, commercial general liability insurance coverage includes:

  • Bodily Injury To Third Parties – Which means bodily harm, sickness, or disease, including resulting death that results from the operations of your business. For example, a customer slips in your store and breaks their hip.
  • Property Damage To Third Parties – Damage caused to property of others. For example, a contractor accidentally damages the building next to the one he or she is working on.
  • Products Liability – The liability for bodily injury (BI) or property damage (PD) incurred by a merchant or manufacturer as a consequence of some defect in the product sold or manufactured. For example, a customer becomes sick after eating at your restaurant.
  • Completed Operations – Work of the insured that has been completed as called for in a contract, or 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.
  • Tenants Legal Liability – Tenant accepts responsibility for the damage they may cause to the building which 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.

The above is only a brief summary of some of the main sections that are part of typical commercial general liability insurance coverage.

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