What is covered by a commercial general liability policy?

Q:

What is covered by a commercial general liability policy?

A:

Commercial general liability (CGL) insurance, as the name implies, covers you for some common sources of liability that you might incur during business operations. That includes any defense costs as well as any damages awarded by the courts. Like most liability policies, this one covers you only for compensatory damages that you are found legally liable for in court. But to go into more detail, there are four main coverage forms included in your CGL policy.

Coverage A Insures you against liability arising from bodily injury and property damage. So, if one of your customers sues you after slipping and falling in your store when you forgot to put a warning sign after mopping, this insurance will respond.

Coverage B – This is your personal and advertising injury liability protection. It steps in to respond if someone takes legal action against you claiming some sort of personal injury (including, but not limited to, false arrest, wrongful entry or eviction, defamation, and violations of privacy). It is important to note that since this is a "general" liability policy, there are some exclusions for advertisers, broadcasters, and publishers since they are considered high risk for these kinds of incidents. This coverage also does not protect you if you publish something injurious that you know is false (find out whether liability insurance will cover you for accusations of libel).

Coverage C – This is voluntary medical payments insurance. It can be used by the insured to voluntarily pay for certain medical expenses for a third party who was injured as a result of your business operations. Examples include first aid, ambulance fees, x-rays, and funeral costs. Unlike Coverage A, liability is not a requirement for this one to kick in. It is no-fault coverage that you can voluntarily call upon to build good will and potentially mitigate a lawsuit.

Coverage D – And lastly, we have tenant's legal liability. This one's optional but it's worth getting if you are renting your business premises because damage to premises you own, rent or control is excluded under Coverage A. This section protects you against any tort damages you might commit against your landlord.

Commercial liability can be a bit complicated but I hope this overview was easy enough to understand. If not, delve a bit deeper by checking out 4 Essential Types of Liability Insurance Every Business Should Have.

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Written by Jacques Wong
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Jacques grew up around the insurance industry and began actively participating in 2013. Since then, he has gotten a Level 2 license, won an Insurance Council of BC award in 2015 for academic excellence in the insurance licensing courses and educates insurance professionals through PNC Learning.   Full Bio