Opening a business is a major achievement. You’ve likely invested a lot of time and money to ensure that your business succeeds. As such, operating a business leaves you vulnerable to multiple risks. This may be a good time for you to learn about comprehensive general liability insurance. This article provides a comprehensive overview of commercial general liability coverage.
Commercial General Liability Coverage Basics
Commercial general liability policies cover your business in liability disputes minus potential exclusions. The policy provides benefits if you are held responsible for property damage or injuring someone. If the injured party purses legal action, your CGL coverage will handle the legal fees. In some cases, CGL policies provide benefits even if your business is not legally responsible. Commercial general liability policies are also included in business packages with liability coverage and property damage.
Who Is Insured?
The classification of your business impacts who is covered under a CGL policy. All the owners, stockholders, executive officers, and directors are covered if you classify your business as a corporation. If you classify your business as a sole proprietorship, you and your spouse are covered under the policy terms. However, remember that you will only be covered for business liability claims, not any personal liability disputes. Commercial general liability policies are designed to protect you if there is an issue with some of the services that your business provides.
Types of Liability Issues Covered
Commercial general liability policies protect your business against products and operations exposure, premises exposure, and indirect exposure. Premises exposure protects your business against potential claims regarding property damage or a bodily injury and covers any disputes regarding operations at and away from the premises and maintenance issues. Products and operations exposure covers your business against claims regarding product damage or bodily injuries caused by faulty products or negligent work. Your business is also covered against indirect liability exposure if you are held responsible for the poor work of hired subcontractors.
Commercial general liability policies include multiple exclusions. Workers’ compensation disputes are a significant exclusion, as you rely on your employees to keep your business functioning properly. Other possible exclusions include expected injuries, pollution damage, mobile equipment, product recall, war damage, and contractual assumptions. Your business may also be left unprotected regarding issues such as breach of contract, false price descriptions, and ordinance violations.
When Is Coverage Triggered Through the Policy?
Commercial general liability policies are written in a claims-made form and an occurrence-made form. The policy covers any damages based on claims made during the policy period in a claims-made form. Whereas an occurrence made form handles damages regardless of when the claim is filed.
CGL policies have multiple coverage limits. All policies include a maximum amount that insurance companies pay to handle damages during the policy period. This normally applies to serious injuries or product damage. Once you have reached the total claims limit, there will be no more payouts during the duration of the policy period. There’s also a per-occurrence limit that covers any injuries, medical bills, and property damage under one occurrence. Additionally, a personal advertising injury limit is also paid on a per-person basis. Your policy may also include sub-limits based on fire damage liability coverage.