Commercial General Liability insurance (CGL) is often associated with brick and mortar shops who need coverage for injuries that occur on their premises. CGL can also cover mobile businesses, however, who risk damaging client property, or even home-based businesses who can face defamation or copyright infringement claims.
In this guide, we’ll cover all the key facts about commercial general liability insurance, including what’s covered, what’s not covered, how much it costs and where to buy a policy.
Please bear in mind, this guide is not written by a lawyer or insurance broker. For answers related to your specific situation, be sure to consult a lawyer or certified broker.
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What Is Commercial General Liability Insurance?
Commercial general liability insurance (CGL) protects business owners from claims of personal injury or property damage from their customers, contractors, clients, vendors and others. Personal injury includes bodily injury claims, as well as emotional injury, loss-of-income, and defamation claims. CGL is one of the most essential types of small business insurance and is often part of a business owner’s policy (BOP).
How Much Does CGL Insurance Cost?
Small businesses can pay anywhere from $200 to $3,000 a year for commercial general liability insurance, depending on their size, coverage limits and type of business. Most small businesses pay between $400 and $600 a year, however, according to Insureon.
How Industry Affects Cost
One of the biggest factors that affects the cost of CGL insurance is industry. Construction and cleaning services pay some of the highest premiums. This is because their work occurs on somebody else’s property, so there is a heightened risk of property damage.
Retail stores also tend to pay high premiums, but for a different reason: Shops and restaurants have a lot of foot traffic, so there’s a higher risk of bodily injury.
Home or office-based businesses, like a graphic design firm, usually pay the lowest premiums. This is because there is little foot traffic and minimal risk of property damage. On the other hand, there may still be risk of personal injury from copyright infringement or defamation.
What Does CGL Insurance Cover?
What exactly CGL Insurance covers varies depending on the policy. When a claim arises, most insurance carriers will compensate you for these costs:
- Legal Defense Costs
- Settlement of Claims
- Lost Profit / Wages – such as, in the event that you have to spend a day in court
Commercial General Liability Insurance Examples
CGL Insurance covers a wide range of personal and property damages. Here are a few examples of common CGL claims:
- Bodily Injury – Slip and fall cases are a common example of a CGL bodily injury claim. Say an employee is mopping in your store and forgets to put up a warning sign. If a customer slips, falls and sustains injuries, they can sue your business for damages.
- Property Damage – Let’s say you run a residential cleaning service. One of your employees is cleaning a wealthy customer’s home and accidentally breaks an expensive vase. CGL insurance would cover the cost of damages up to your policy limit.
- Advertising Injury – In an advertising campaign for your auto repair business, you compare yourself to a competitor. You state that your competitor has dishonest pricing. Your competitor finds this claim unfounded and sues you for defamation. A CGL policy would cover your defense, up to your “personal damages” advertising coverage limit.
- Products-Completed Operations Coverage – A construction company installs a residential deck in a customer’s backyard. Months after the job is complete, the deck collapses due to a construction failure. The customer was injured during the collapse and seeks compensation for damages. The construction company would be covered by CGL insurance, ONLY IF their CGL policy includes products-completed operations coverage.
What Does CGL Insurance Not Cover?
First and foremost, CGL insurance does not cover intentionally illegal acts: If you or an employee intentionally cause injury or property damage, a CGL policy will not cover damages.
Many other exclusions will vary depending on your policy. You may be able to get coverage for an additional premium, or find it from a different carrier. Here are some common examples of claims NOT covered by CGL insurance:
- Employee Injuries – CGL insurance does not cover employees who are hurt on the job. This is covered by Worker’s Comp Insurance instead.
- Professional Negligence – CGL insurance will not cover professional errors, such as a mistake made while writing a contract. If you’re looking for this type of coverage, check out our guide to Errors and Omissions Insurance.
- Liquor Liability – If you sell, distribute or serve alcoholic beverages, a CGL insurance policy typically won’t cover any damages or injuries that result from alcohol consumption. Liquor Liability coverage may be available for an additional premium, however.
- Product Liability – Also known as Products-Completed Operations Coverage, this involves any damages that occur after the job or transaction is complete. Some CGL policies offer this type of coverage. Others do not. For manufacturers and construction businesses that need extensive coverage in this area, you may need a separate Product Liability Insurance policy.
- Commercial Vehicles – If you have vehicles that your business uses, they will require their own coverage. Vehicles could include anything from a semi truck to a fleet of company cars for a sales team to a food truck. General liability insurance will not cover claims arising from the operation of a commercial vehicle and a good commercial vehicle policy will be essential.
The Bottom Line
A commercial general liability insurance (CGL) policy is essential to any business that operates a brick and mortar location. A policy can protect you in the event that somebody (besides your employees) are injured on your premises. It’s also essential insurance for “mobile” businesses like construction companies or cleaning services that risk damaging client property. Finally, it can help home-based businesses that risk facing personal injury claims of copyright infringement or defamation.
If you’re looking to get coverage, we recommend speaking with The Hartford. Their specialists will work with you to assess the risks your business may face and help you select the coverage you need. Fill out a short questionnaire online to get a free, no obligation insurance quote.