20 Examples of Commercial General Liability Insurance

Commercial general liability (CGL) insurance protects businesses from third-party claims involving bodily injury, property damage, or reputational harm. It covers legal defence, settlements, and medical costs. With the right coverage, SMBs can avoid financial losses from various disputes.

Third-party claims are more common than you think. A customer could slip on your floors, a subcontractor may damage your signage, or a bystander might get injured near your job site. These are everyday accidents that can result in serious legal expenses. Even one lawsuit could put you out several hundred thousand dollars.

To manage these risks, you need commercial general liability coverage. Whether you run a small retail store or a multi-million dollar construction company, CGL is non-negotiable for site-based business operations. Here’s how it helps protect you from various lawsuits related to third-party bodily injury or property damage.

What Is Commercial General Liability Insurance and Why You Need It

Commercial General Liability Insurance (CGL) is a broad-form business insurance policy. It protects companies against legal fees and claims from third-party personal injury, property damage, and advertising injury.

In Canada, CGL is not a legal requirement. However, it’s widely considered essential for small business owners who interact with the public, operate physical locations, or perform work on client sites.

It’s not exclusive to companies with hundreds of employees. In fact, reports indicate that 52% of civil lawsuits are directed against SMBs.

Here’s a quick overview of where and how CGL can provide coverage:

• Accidental Injuries: Apart from legal defence costs, CGL covers medical expenses if a third party is accidentally injured while visiting your business premises.
• Product Liability: You’re protected if the products you manufacture or sell directly cause injuries.
• Property Damage: CGL provides coverage if an employee causes property damage while delivering goods or services to a customer.
• Reputational Liability: If you are sued for personal or advertising damages relating to slander or libel, your business is covered.

Source: Pexels

What Does Commercial General Liability Insurance Coverage Include?

Let’s look at how CGL can protect your business from financial losses, starting with the most common risks of bodily injury and property damage.

Accidental Injuries

Many CGL claims involve third-party injuries during regular business operations, on-site or in the field. Here are some real examples of how these incidents happen:

1. A restaurant’s employee mopped the floors and forgot to put up a caution sign. As a result, a customer slips and gets injured.
2. An overhanging lamp in a boutique falls on a shopping customer, causing injury.
3. While a construction firm is building a house, one of the tools falls off the roof and ends up injuring a pedestrian below.
4. A fitness studio hosts a community workout class. During the session, a participant trips over a loose resistance band left on the floor and suffers a sprained ankle.
5. A landscaping crew is trimming trees on a commercial property when a falling branch hits a passerby walking on the adjacent sidewalk, resulting in a head injury.

In these events, CGL helps the involved small business owner cover legal costs, settlements, and medical expenses. Instead of paying out of pocket and compromising financial stability, you’ll have protection.

Image source: Pexels

Product Liability

Whether food, cosmetics, or equipment, defects or contamination can lead to serious injuries or illnesses. These incidents often result in complex and expensive litigation lawsuits without proper CGL coverage.

Here are some types of product liability insurance claims:

6. A restaurant’s undercooked chicken causes food poisoning to its patrons.
7. The products manufactured and/or sold by a skincare shop caused damage to a customer’s skin.
8. The masks, gloves, and other PPE sold or manufactured by a supplier have been proven to be ineffective due to damage or faulty design, which caused injury or illness to the users.
9. A local café sells bottled cold-brew coffee. Due to a sealing defect, several bottles exploded during storage, injuring a customer and damaging nearby property.

After a product-related incident, your policy can help cover legal fees, medical costs, and settlement payouts. As the insured, you’ll need to report the incident promptly, provide documentation, and work closely with your insurer’s legal team throughout the claims process.

Source: Pexels

Property Damage

Third-party property damage is one of the most common claims businesses face in field service, delivery, and renovation work. From broken valuables to structural damage, even a small mistake can lead to expensive repairs and potential lawsuits.

Here are some real-world examples CGL can cover:

10. A plumber sent by a plumbing services provider makes a wrong move with a high-power tool, damaging the client’s property.
11. A contractor from a waterproofing company is accused of worsening a crack in the home’s foundation.
12. Workers from a snow removal company make a mistake with a snowplough, damaging a parked vehicle.
13. While a renovation company does repair work on a home, a neighbouring property sustains damage due to their operations.
14. Delivery personnel, installers, or handymen working within a client’s home accidentally knock over and break an antique item.

To recover from these incidents, CGL insurance can cover the cost of repairing or replacing the damaged property and legal fees if the client files a claim. This helps protect your business from out-of-pocket expenses while preserving client trust.

Reputational Liability

Reputation-related claims can come from unexpected places, like a poorly worded ad, a social media post, or even a marketing concept too close to a competitor’s. They can lead to lawsuits over libel, slander, copyright infringement, or privacy violations.

Here are some likely examples:

15. An individual or competitor files a lawsuit against the company for slander or libel.
16. Competitors take legal action after discovering that one of their advertising ideas was reused without permission.
17. Marketing content from the business triggers a copyright infringement claim.
18. Public remarks made about a rival’s products lead to a product disparagement lawsuit.
19. A client sues after their personal information is shared in a company publication.
20. A real estate agency faces a defamation suit after posting a comparison blog with false claims about other firms.

CGL helps cover legal defence fees, settlements, and reputational fallout. While some reputational issues can be resolved out of court, a comprehensive CGL policy ensures you’re not paying out of pocket if things escalate.

Source: Pexels

Additional Liability Coverages to Consider

Depending on the nature of your business, there may be other types of commercial general liability insurance coverage to consider.

Commercial Auto Insurance

Commercial auto insurance covers businesses that maintain one or more commercial vehicles. This type of insurance offers protection when commercial cars get involved in incidents, causing property damage or bodily injury. The physical vehicles are also insured if stolen, damaged, or vandalized.

Worker’s Compensation Insurance

This type of insurance provides benefits to employees who are injured or become ill while performing a work-related task or on the premises. It covers lost wages, medical costs, and death benefits.

Pollution Liability Insurance

Pollution liability insurance covers legal costs, emergency response costs, and/or cleanup costs if your business is sued for various kinds of environmental pollution. Such pollution incidents can be sudden, gradual, or mould/legionella-related.

FAQs About Commercial General Liability Coverage

What is the primary purpose of commercial general liability insurance?

CGL protects a business against claims from third parties who suffer bodily injury or property damage due to the business’s operations, premises, or products. It also covers defence costs (legal fees, court costs) even if your business is later found not liable. It may include personal and advertising injury (e.g., libel, slander, copyright infringement) and completed operations liability.

What is the standard CGL policy limit?

Many small businesses choose a $1 million per occurrence or $2 million aggregate baseline CGL limit. However, coverages still vary by risk, industry, and contract demands. 

In Summary

• Commercial general liability (CGL) insurance protects your business from third-party lawsuits involving bodily injury, property damage, or reputational harm.
• It’s not required by law in Canada but is considered essential for site-based operations, especially for businesses that interact with the public or perform services on client property.
• CGL covers many claims, including slip-and-fall injuries, damaged client property, product-related harm, and advertising-related lawsuits.
• While incidents may vary, legal and settlement costs can easily climb hundreds of thousands. CGL helps prevent those expenses from falling on your shoulders.

Stay One Step Ahead of Unexpected Lawsuits With Kase Insurance

Accidents happen even in the safest workplaces, and one seemingly minor mishap can lead to a costly lawsuit. When these events occur, inexpensive, generic policies won’t provide adequate protection.

At KASE Insurance, we tailor commercial general liability policies to your risks, industry needs, and contract requirements. Once a claim comes, you can rest assured that you’re insured and protected.

Book a consultation with our award-winning specialists today and receive a custom quote! Let’s talk about how to protect your business from various liabilities.