Commercial general liability insurance (CGL) is the standard commercial liability policy for insuring businesses. Its key appeal is its comprehensive nature, it covers all hazards within the scope of the insuring agreement not otherwise excluded and provides automatic coverage for new locations and activities of a business that come about after policy inception and throughout the policy term. It contains three primary coverage sections: premises liability, products liability, and completed operations. These in turn each contain a subsection of liabilities, the 5 most important of which will be explored in this editorial.
What Does General Liability Cover?
The chief purpose of general liability cover is to protect the business from claims made against it by members of the public and the potential financial losses that could flow from this. The following five categories are the main sections of coverage provided by CGL:
- Bodily injury – refers to accidental physical injury to a nonemployee’s body resulting from a condition on the business’s premises. An example might be if a customer slipped on a wet floor on your business premises and injured themselves.
- Property damage – refers to an injury to real or personal property, whether that be the property of the business of a client, that results either from a condition on your premises or operations in progress. An example might be if an employee damaged a customer’s house whilst delivering their employer’s goods or services to them.
- Product liabilities – refers to the scope for liability affecting any business that manufactures, sells, handles, or distributes goods for the potential liability for bodily injury or property damage arising from such goods. An example might be if a cooker sold by a business caused a customer to suffer serious burns as a result of a defective design.
- Personal liabilities – refers to libel, slander, copyright infringement, invasion of property and privacy, wrongful eviction (entry or invasion of privacy), false arrest
- Advertising liabilities injury – refers to losses caused by a business’s advertising or by violating another company’s copyright
- Read more about the full extent of liability insurance available to LLCs and the benefits of commercial general liability insurance specifically.
Major Exclusions of CGL
Several common sources of claims are not included within the scope of general liability insurance. Primarily: intentional injury; insured contracts; liquor liability; workers compensation and employers liability; pollution; aircraft; automobile; watercraft; mobile equipment; war; care, custody, and control; damage to your work; impaired property; sistership liability, failure to perform and professional liability. It is of course important to be cognizant of the coverage limits of CGL.
How Much Does CGL Cost?
The average cost of a liability insurance policy for an LLC ranges from about $300 to $1000 a year. However, different types of businesses will incur different risks, and as a result, an individual cost needs to be determined on a case-by-case basis. Factors that can influence the premiums a business must pay for CGL include risk exposure (some businesses by their very nature will incur more risks than others, thus demanding a higher premium), location (generally based on ZIP code, more expensive areas necessitate a higher premium), annual payroll amount (how many people the business employs), per occurrence limit (the amount of coverage available per claim), aggregate limit (the amount of coverage available per policy period), deductible (the amount of the loss that the insured is required to pay before benefits from the CGL are payable).
On balance, commercial general liability is a comprehensive form of insurance that defends against a great number of risks. These can be categorized into 3 general sections of coverage: premises liability (which includes accidental injury or property damage that results from either a condition on an LLC’s premises or the LLC’s operations in progress, on or away from premises), products liability (which includes hazards of potential liability for bodily injury or property damage that arises out of your completed work) and completed operations (which includes damages caused by an LLC’s work/product that occur after they have completed a job, it’s often used by construction companies). These 3 sections of coverage are fleshed out with a greater list of more specific liabilities that CGL protects against, 5 of which have been explored in this editorial.