Commercial General Liability (CGL) is considered the cornerstone of small business insurance. This coverage can be purchased as a standalone (mono-line) policy or included in a Commercial Package Policy or Business Owner’s Policy (BOP). Often referred to as “slip and fall” insurance, the CGL contains much more coverage to transfer your risks. What does general liability insurance cover? The heart of the CGL is the Bodily Injury (BI) and Property Damage (PD) coverage.
This coverage is triggered when the business is found to be legally liable for injuries or property damage to a third party, which is usually a customer. For example a lawn business is sued when a worker operating a lawn mower hits a rock that is propelled like a missile into the head of a child playing on or near your property or if the rock goes through the window of a vehicle. Any business that sends employees into the business or home of a third party is at risk of something going wrong as the result of the actions of your employee.
Personal & Advertising Injury Liability Typically a misunderstood coverage, the Personal Injury Liability coverage protects the business if a third party brings an action alleging libel, slander and false arrest As Social Media advertising becomes more popular, this coverage has become a vitally important part of the CGL. The coverage is triggered by a claim from a third party for financial loss or damaged reputation resulting from your business’ advertising.
Premises liability provides coverage for damage caused by you or your business to premises rented by you. If for example, you rent additional space in a warehouse for storage and the warehouse owner claims that you or an employee caused property damage to the warehouse space, your CGL will respond to claims for the alleged damage. This coverage is particularly important for contractors that perform services such as tile or carpet installation, roofing, building or remodeling of homes or buildings and just about any other service to a building or dwelling.
This coverage protects the insured from workmanship claims after a project is completed. This is the coverage that General Contractors are most interested in for their sub-contractors. If something goes wrong after a project is completed, the CGL will respond when a claim is filed against your business. This coverage is included in the CGL by most commercial insurance companies or can be endorsed onto the policy.
Typically purchased with limits of $5,000 to $50,000, Medical Payments (Med-Pay) can be a life saver for a small claim if a third party is injured while on the business’ property. Since liability does not have to be established, a third party can be reimbursed for minor injuries suffered while on your property without having to bring an action against your business. Using the same lawn business example above, if the rock that hit the child only caused a minor injury that was easily treated in the Emergency Room or Walk-In clinic, the insurance company will use the Med-Pay coverage to pay for damages up to the limits in the policy. Depending on your type of business, many commercial insurance companies have a variety of coverages that can be added to your policy for an additional premium:
- Employment Practices Liability – this coverage is especially important for businesses with employees. The coverage is triggered for claims such as wrongful termination and sexual harassment.
- Contactors Equipment – this endorsement allows the contractor to purchase additional coverage for the equipment they use to perform their services. This is especially important for contractors who leave tools and equipment at the job site.
- Professional Liability – provides coverage for errors and omissions while performing professional services such as accounting, legal advice, hair stylist, real estate sales and medical services.
For professionals that require state licensing, this coverage is usually mandatory.
- Hired Auto Liability – this coverage will extend the GL limits to a rented or hired vehicle such as rental cars and trucks.
To transfer the risks that come with owning or operating a business, Commercial General Liability should be carried without exception.