Commercial General Liability Insurance

Commercial General Liability Insurance. Would you be protected if somebody was injured or otherwise felt that your business had wronged them? That's not a question that most business owners want to consider, but it's important that they do. The fact is that we live in a society that is very litigious. People often don't take responsibility for their own actions, and they are quick to place blame when they don't get the outcome they want.
Carrying adequate commercial general liability insurance to protect your business isn't an option - it's your responsibility, and a must if you want to make sure that you don't get put in a position where you have to pay money out of pocket to cover expenses associated with a loss.
Understanding commercial general liability insurance is vital to protect your business from lawsuits for bodily injury or property damage. Learn how a CGL policy can shield your business from real or frivolous claims.
Below are some answers to commonly asked commercial general liability insurance questions:
- What Is Commercial General Liability Insurance?
- How Much Does Commercial General Liability Insurance Cost?
- How Does Commercial General Liability Insurance Work?
- What Are Other Risks That Can Be Covered by Commercial General Liability Insurance?
What Is Commercial General Liability Insurance?
Commercial General Liability (CGL) Insurance is a type of insurance that provides coverage to businesses against third-party liability claims for bodily injury, property damage, personal injury, or advertising injury. This insurance policy is essential for any business as it protects the company from financial losses and reputational damage that can arise from legal disputes.
In the event of an accident or injury, a business could be held liable for damages. The cost of these damages could be substantial and may threaten the financial stability of a company. CGL insurance is designed to protect businesses from these types of financial risks. Commercial General Liability Insurance is an umbrella term that covers a wide range of risks. These risks may include:
- Bodily Injury: This refers to physical harm caused to someone else by the policyholder's business operations or products.
- Property Damage: This refers to physical damage caused to someone else's property by the policyholder's business operations or products.
- Personal Injury: This refers to non-physical harm caused to someone else by the policyholder's business operations or products. This could include claims of libel or slander.
- Advertising Injury: This refers to harm caused to someone else's reputation by the policyholder's advertising practices.
CGL insurance coverage is not just limited to incidents that happen on business premises, but it also extends to events that take place offsite or due to products or services provided by the policyholder.
It's important to note that CGL insurance does not cover all risks. Some risks are not covered by CGL insurance and may require a different type of insurance policy. For example, CGL insurance does not cover employee injuries, which would require Workers' Compensation insurance.
In conclusion, Commercial General Liability Insurance is a vital insurance policy for any business. It provides coverage against third-party liability claims for bodily injury, property damage, personal injury, or advertising injury. By having CGL insurance, businesses can protect themselves from financial losses and reputational damage that can arise from legal disputes.
How Much Does Commercial General Liability Cost?
Commercial General Liability insurance (CGL) is a crucial form of coverage that protects businesses from various types of liability claims. It is an essential part of risk management and provides financial protection for businesses against third-party claims for bodily injury, property damage, and advertising injury. Many business owners wonder how much CGL insurance costs and what factors influence the cost.
The cost of Commercial General Liability insurance varies based on several factors such as the type of business, its size, location, and the level of risk involved. In general, small businesses tend to pay less for CGL insurance than larger ones, but this varies depending on the industry.
The cost of CGL insurance typically ranges from $500 to $2,000 per year for small businesses. However, this can vary depending on the type of business and the level of risk involved. For example, a small landscaping business may pay around $500 per year for CGL insurance, while a small construction company may pay up to $2,000 per year due to the higher risk involved.
Another factor that can affect the cost of CGL insurance is the location of the business. If a business is located in an area with a high risk of natural disasters or crime, the cost of insurance will be higher. For example, a business located in a hurricane-prone area may pay more for CGL insurance than one located in an area with low risk.
The level of coverage required also affects the cost of CGL insurance. Businesses with higher risk exposures may require higher coverage limits, which will increase the cost of the insurance. For example, a business that employs workers in hazardous conditions may require higher coverage limits than a business that operates in a low-risk environment.
Finally, the type of business also affects the cost of CGL insurance. Businesses that operate in high-risk industries such as construction or manufacturing may pay more for CGL insurance than those in low-risk industries like retail or professional services.
In conclusion, the cost of Commercial General Liability insurance varies based on several factors, including the type of business, its size, location, level of risk involved, and coverage limits. It is crucial for business owners to carefully consider these factors when purchasing CGL insurance to ensure they have the appropriate coverage and are not overpaying for their insurance needs.
How Does Commercial General Liability Insurance Work?
Simply put, commercial general liability insurance works by allowing you to continue to do business even if you find that you are caught up in a lawsuit. You won't have to worry about your assets being frozen to cover liability because the insurance will take care of that for you.
Here are some of the general categories of costs that can be covered by commercial general liability insurance:
- Legal costs associated with investigating or defending a suit filed against you, including attorneys' fees, court costs, and witness fees.
- Income you lose as a result of having to defend yourself against a suit.
- Judgments or settlements to be paid in the event that you lose a suit against you or choose to settle it out of court.
- Premium on any court-mandated bonds related to a suit against you.
In addition to covering you as a business owner, your CGL policy will cover the following people:
- If your company is a corporation, it will cover all executive officers, stockholders and directors if they are acting within their official capacity.
- If your company is a general partnership or joint venture, all partners, members, and their spouses will be covered if they get sued for something related to your business.
- All of your employees will be covered for losses related to their duties as employees.
- If you have subsidiary companies, most policies will cover those companies if you own at least 50% of the stock.
- Some companies have written indemnifications to protect vendors who sell their products from damages related to the products - in such cases, the vendors would also be covered by your policy.
- Volunteers who do work on your behalf would be covered for losses or liabilities incurred while they were volunteering for you.
As you can see, the scope of commercial general liability insurance can be fairly broad and can protect your company in a variety of ways.
What Are Other Risks That Can Be Covered by Commercial General Liability Insurance?
In addition to the coverages listed above, general liability insurance may also include coverage for other risks if you choose to add them. These risks may be included as part of your policy, or they may be added as riders or additional coverage in some situations.
- Bodily injury and death - if someone is injured or killed as a result of something related to your business, you would be covered for medical expenses, loss of services, and court-ordered compensation for an accidental death.
- Property damage - if someone's personal or business property is damaged in the course of your business, your general liability coverage would protect you and pay for both physical damage to the property and loss of use.
- In the event that one of your products malfunctioned or caused an injury, your completed products coverage would protect you from any suits related to the damage.
- Contractual liability - your company might take on additional liability by signing a contract, such as a maintenance contract, a building lease, or a municipal indemnification.
- Liquor liability - if you serve alcohol at occasional company functions, such as summer outings or holiday parties, you will be covered for liability related to the liquor as long as you do not charge for the liquor.
- Fire, explosion, and lightning damage - if a fire starts in your office and damages an adjoining office, your general liability policy will cover the damage to the other office.
- Hired auto and non-owned auto - this coverage can be added to your policy and will protect you in the event that there is an accident involving a rented car or a personal vehicle being driven on company business.
- Personal injury - you also have coverage for personal, non-physical injury to another party, including libel, slander, wrongful termination, and privacy violations.
- Advertising injury - in the even that your company is accused of false advertising, libel, misrepresentation, or copyright infringement, your general liability may cover it.
It is important to note that one area that is not covered by commercial general liability insurance is an on-the-job injury to an employee. Those costs are excluded from CGL insurance but will be covered by your workers' compensation plan.
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