Commercial General Liability (CGL)

What Is Commercial General Liability (CGL)

Commercial general liability (CGL) is a type of insurance policy that provides coverage to a business for bodily injury, personal injury, and property damage caused by the business’s operations, products, or injuries that occur on the business’s premises. Commercial general liability is considered comprehensive business insurance, though it does not cover all risks a business may face.

Understanding Commercial General Liability (CGL)

Commercial general liability policies have different levels of coverage. A policy may include premises coverage, which protects the business from claims that occur on the business’s physical location during regular business operations. It may also include coverage for bodily injury and property damage that is the result of a finished product or service done on another location.

Excess liability coverage can be purchased in order to cover claims that exceed the limit of the CGL policy. Some commercial general liability policies may have exclusions to what actions are covered. For example, a policy may not cover the costs associated with a product recall.

When purchasing commercial general liability insurance, it is important for the business to differentiate between a claims-made policy and an occurrence policy. A claims-made policy provides coverage for whenever a claim is made, regardless of when the claim event happened. An occurrence policy is different in that it covers claims where the claim event occurred during the time of the policy even if the policy is now expired.

In addition to commercial general liability policies, businesses may also purchase policies that provide coverage for other business risks. For example, the business may purchase employment practices liability coverage to protect itself from claims associated with sexual harassment, wrongful termination, and discrimination. It may also purchase insurance to cover errors and omissions made in financial reporting statements, as well as coverage for damages, resulting from the actions of its directors and officers.

Special Considerations 

Depending on its business needs, a company may need to name other companies or persons as "additional insured" under their commercial liability insurance policy. This is common when businesses enter into a contract with another entity. For example, if an automobile repair garage enters into a contract with ABC Co. to provide cleaning services for their facility, ABC Co. may require the garage owners to add ABC Co. as "additional insured" on their commercial general liability coverage.

Example of Commercial General Liability (CGL)

Some examples that would require CGL include the following: