Commercial General Liability Explained
A commercial general liability (GCL) is an insurance policy that protects you and your business from a financial loss. Your company may be liable for injuries or damages to a third party resulting from the services or products you offer to the general public. Liabilities do arise from accident, error (by omission or commission), or non-professional negligence that causes another person harm or financial loss. No matter how highly trained and professional you and your employees are, you can’t completely rule out certain unwanted and unforeseen circumstances.
How Does Commercial General Liability Work?
Commercial general liability is a risk management plan that specifically covers your business from claims from a third person. Depending on a company’s line of business, A CGL policy can be designed to cover different eventualities under the following basic categories:
- Bodily Injury Liability
If a customer or any other individual visits your business site and gets injured, you may have to cover the medical payment. Body injury coverage implies that certain negligence has caused the event. Sometimes you may not directly cause the injury, but so long it happens within your business premises, you may still be found legally negligent. For instance, the injured person may claim he slips because you fail to place warnings signs around the wet floor. CGL insurance policy covers hospital bills and nursing expenses for an injury. Also, it covers funeral expenses if someone is injured and killed in an accident on your business premises.
- Property Damage Liability:
If your business is found liable for damages to a third party’s physical property either on or off-premises, the policy will help you mitigate the financial cost of the liability. Third party’s property damages could be directly from your business activity or from a product offer. For example, if a home appliance which your company produced malfunctioned and caused a fire incident to a buyer’s property. You may be liable under non-professional negligent acts.
- Personal and Advertising Injury Liability:
This helps cover your company from any legal responsibility arising from business infractions such as libel, copyright infringement, false arrest, entry or eviction of privacy, and slander.
Who Needs CGL Insurance?
Every business owner needs a CGL policy to help secure their businesses from legal suit that can adversely affect their trajectory. Liability payment for just a single legal action against your business could cause an irrecoverable bankruptcy and reputation damage. You can prevent such by insuring your company with a CGL policy customized for your line of business. The policy can be bought as a stand-alone coverage, as part of Commercial Package Policy, or as part of a Business Owners Policy. CGL policy is a must-have whether you are a contractor or a tradesperson.
Does CGL Cover Workers Compensation?
Insurance regulations for businesses often set a distinction between coverage for the general public and the employees. CGL is meant to cover third-person, and it doesn’t cover employment practices liability and workers compensation. A workers compensation policy, which also covers employers liability, can be bought as a separate policy.