The most essential element of any business owner’s insurance portfolio is the commercial general liability (“CGL”) policy. The policy offers the widest-ranging and most comprehensive business liability coverage available. From Fortune 500 companies to mom and pop startups, every business should have at least a CGL Policy.
CGL insurance provides three basic kinds of coverage. The first and the most commonly used is protection from claims for “bodily injury” and/or “property damage” that accidentally occur on your business premises or as a result of your products, services, or operations. These include accidents at your store, office, factory, warehouse, or other place of business (e.g., slip/trip and falls, dangerous conditions on your property, and criminal acts of third parties/inadequate security, etc.). But this coverage is also available for claims resulting from completed work or products your business performs, ships, or installs elsewhere (e.g., faulty construction, defectively manufactured products, etc.). Essentially, it will be covered as long as the resulting bodily injury or property damage happens in the U.S. during the year that your policy is in force. Coverage may be subject to various exclusions (e.g., for contractual liability, automobile-related claims, or injuries to employees) and conditions (e.g., prompt notice, coordination with other applicable insurance, etc.).
The second basic protection the CGL policy provides is against claims for “personal and advertising injury.” These claims are less common and include things like: “false arrest” and “malicious prosecution”; wrongful eviction; libel, slander, disparagement, and invasion of privacy; and copyright infringement and other intellectual property torts committed in your advertising. Again, these claims are covered as long as the wrongful act took place in the U.S. during the year the policy was in effect. And again, personal and advertising injury claims are also subject to their own list of exclusions and conditions.
With both the “bodily injury” and “property damage” coverage and the “personal and advertising injury” coverage, the CGL policy provides both indemnity (i.e., payment of settlements of and judgments on covered claims) and legal defense against suits. The CGL covers the fees and costs charged by an attorney or law firm to defend covered lawsuits filed against you. The “defense” benefit is of particular value because the insurer’s duty to defend suits is broader than its duty to indemnify. Even suits that may not be covered or subject to an exclusion or condition must be defended at the insurance company’s expense as long as the suit is “potentially” or “arguably” within the policy’s coverage. This is of great value because, in many instances, the cost of litigating a dispute matches or exceeds the claim’s value.
The third basic protection the CGL policy provides is “medical payments.” This coverage provides for the payment of certain medical expenses incurred by customers, suppliers, and others injured while visiting your business premises. This coverage is available regardless of who is at fault for the injury. Still, it is subject to a short list of exclusions, and the coverage is usually limited to a fraction of the amount available under the other two coverages.
While most businesses must supplement their liability insurance portfolio with additional policies providing protection from specialized risks (e.g., auto, professional, employers, directors and officers, etc.), the CGL Policy is the business liability workhorse. If you have questions or issues related to insurance coverage, contact Greg O’Brien for more information at 216-621-7860.