Insurance is an important part of any company's business plan. Insurance can save your company if you experience a catastrophic loss and protect your cash-flow when an unexpected accident occurs. Commercial general liability (CGL) insurance is an extremely important part of your business insurance, stepping in to help when an incident causes your company to be sued.
What Is CGL?
Simply put, CGL responds when your company is sued by another party. The suit can be the result of property damage caused by one of your employees or a claim for bodily injury to an employee or third party. CGL can also respond if you are sued for libel or slander as well as any harm your company causes to a property you rent. CGL provides protection by paying the legal fees associated with defending your company against the suit, as well as any settlement or court award. Most CGL policies offer protection against four different types of claims.
Bodily Injury And Property Damage Liability
Bodily injury and property damage liability is the cornerstone of CGL insurance. This coverage responds when an employee causes damage to a third party's property, such as when a plumber accidentally causes water damage to a customer's home. It also responds when a third party is injured by your company or its employees. A common bodily injury claim occurs when a customer slips on the floor of a retail store and injures himself, or when a construction worker accidentally drops a tool onto a passer-by.
Personal Injury Liability
Not to be confused with bodily injury, which physically harms an individual, personal injury liability focuses on words. Personal injury coverage responds when you, your employees or your company is sued for libel or slander. Typically, suits are launched with an accusation your company damaged a person’s or company's character, reputation or position in the community, due to libelous (written) or slanderous (spoken) defamatory statements. For your liability policy to respond, you cannot know the statements were untrue when they were stated.
Medical Payments
Occasionally, the best defense against being sued is acting proactively when an accident does take place. If someone is injured on your property or because of the acts of an employee, medical payments coverage will voluntarily pay for their medical bills without them requiring them to file a lawsuit. In many cases, rising to the occasion by offering to pay an injured person's expenses prevents a lawsuit and maintains the company's reputation within the community.
Tenant's Legal Liability
If you rent your office, retail outlet, warehouse or shop from another party, tenant's legal liability responds when you are held legally liable for causing damage to the property. If if you or your employees were to cause a fire that damages the property, tenant's legal liability coverage would respond to provide restitution to your landlord. Similarly, if a pipe were to burst and cause water damage, your CGL policy will step in to help.
What's Not Included
As broad as many CGL policies are, a number of standard perils are not covered by most policies. These include any claims involving environmental damage or pollution caused by your company or your employees. It excludes product liability claims when your products cause harm as well as claims due to your company's errors or omissions, also referred to as professional liability claims. Insurance products are designed to respond to all of these exclusions as well as almost any foreseeable peril, but these must be purchased separately from your CGL policy.
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