What is commercial general liability (CGL) insurance?

In today’s litigious environment, if you’re in business, you’re at risk of incurring a lawsuit. A client might trip and badly injure themself in your offices. A customer’s car may be damaged by your equipment at a job site. Another business may claim you’ve infringed in your advertisement on their copyrighted advertisement.

If your business is found liable for injury or damage in a court of law, you may be exposed to catastrophic financial consequences — which is why you need commercial general liability insurance.

How to protect your business with commercial general liability insurance

As opposed to specialized insurance needed for certain types of risks, such as professional liability insurance for law firms, commercial general liability insurance (also referred to as general liability or CGL) safeguards from the economic fallout of common incidents that happen while running just about any business.

General liability is critical to have if:
 

• Anyone visits your place of business — whether it’s an office, retail store or factory.
• Your employees work off-site — such as at a construction site.
• You regularly advertise your business or promote it on social media.
• You manufacture, sell, or distribute a product.

Many people ask, “How much does liability insurance cost?” As with most types of policies, the cost depends on what coverage you need, what policy limits are recommended for the kind of company you run, and the size of your business.

What does commercial general liability insurance insure?

General liability insurance typically covers the insured’s liability for damages for:

• Bodily Injury. For example, someone gets hurt on your premises or at another site where you’re doing business and brings a lawsuit against you.
  
• Property damage. For example, while repairing a wall in a client’s retail shop your employee accidentally breaks a pipe, causing damage to their customer’s merchandise.
• Personal and Advertising Injury. Offenses include libel, slander invasion of privacy and copyright infringement.

If there’s a lawsuit brought against you for insured damages, your general liability policy will pay the cost of defending you in court. If there is a judgment against you for such insured damages, the policy will also make the indemnity payment. Legal action is expensive, even if the judgement goes your way; CGL pays for legal and other expenses related to your lawsuit subject to the terms and conditions of your policy.

What’s not included in CGL insurance

There are specific types of liability that will not be insured by commercial general liability policy:
 

• Financial loss arising from alleged negligent errors or omissions or wrongful acts are the subject of an errors and omissions (E&O) policy.
• Management liabilities require special insurance such as Directors and Officers (D&O).
• Risks specific to certain businesses, such as restaurants and bars that serve alcohol, which need specific liquor liability insurance; or manufacturers of aircraft products, which should have an aircraft products policy.
  

Your agent or broker can help you determine the CGL and other liability needs of your business and may also recommend an umbrella policy to extend the CGL protections.