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Commercial general liability (CGL) is a form of insurance policy that covers a company for physical harm, accident, and property damage caused by the company’s operations, goods, or injuries that occur on the company’s premises.
This commercial general liability insurance does not cover all hazards that a company may encounter but still considered a comprehensive business insurance.
NOTABLE POINTS
- CGL meaning entails a type of comprehensive insurance that provides coverage for injury or damage caused by a company’s operations or goods or on its premises.
- There are two types of CGL policies claims-made policies that pay claims regardless of when the accident occurred, and occurrence policies that require the event to occur within a certain time range.
- As an “additional insured,” businesses can add other companies or individuals with whom they do business to their commercial liability insurance policy.
Commercial General Liability (CGL) Meaning
There are various levels of coverage available in commercial general liability policies. For example, a policy may contain premises insurance, which protects the company from claims made at the company’s physical site during normal business operations.
This policy may also include coverage for personal injury and property damage caused by a finished product or service performed at another site.
Claims that exceed the CGL insurance limit can be covered by purchasing extra liability insurance. Some commercial general liability plans may also have limitations on the kinds of claim that are covered. A policy may, for example, exclude the costs of a product recall.
When obtaining commercial general liability (CGL) insurance, it is essential that the company distinguishes between a claims-made coverage and an event policy. A claims-made policy covers claims made at any time, regardless of when the claim event occurred. An occurrence policy is distinct because it covers claims that occurred within the policy’s term, even if the policy has since expired.
Businesses may also obtain insurance that covers other business hazards in addition to commercial general liability plans. For example, the company could get employment practices liability insurance to defend itself from allegations of sexual harassment, wrongful termination, and discrimination. It may also obtain insurance to cover errors and omissions in financial reporting statements, as well as coverage for losses originating from its directors’ and officers’ conduct.
Special Features
Depending on its business objectives, a firm may need to list other companies or individuals as “additional insured” under their commercial liability insurance policy. This policy is regular when a company enters into a deal with another corporation. For example, suppose an automobile repair garage contracts with ABC Co. to offer cleaning services for their facility. In that case, ABC Co. may ask the garage owners to include ABC Co. as an “additional insured” on their commercial general liability coverage.
Example of Commercial General Liability (CGL)
The following are some instances of situations that would necessitate CGL:
- A customer walks into your store and notices that the floors have recently been washed and polished, making them quite slippery. The customer falls and breaks their leg on the floor.
- When one of your electrical company’s employees visits a customer’s home for an electrical wiring project and he mistakenly creates a fire.
- An individual claims libel or slander as a result of an advertisement you made.
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