A man holding up a sign that says “Are You Covered?” suggesting the need for businesses to have CGL insurance

What Does a CGL Policy Cover?

Jan 21 2022

Whether you’re new to business insurance or you’ve had business insurance for a while, chances are you’ve heard about CGL insurance at some point. This is because CGL insurance (or commercial general liability insurance) is a must-have and foundational type of insurance for nearly all kinds of businesses.

Having a tailor-fit CGL policy from a trusted insurance broker will protect your business from financial loss due to third-party property damage or third-party injuries connected to your business’s operations. 

In this article, we delve deep into what a CGL policy covers, which businesses need this insurance policy, and more.

Let’s get started!

Close-up of a business owner reviewing CGL insurance documents

What Is a CGL Insurance Policy?

A CGL insurance policy is one of the main types of commercial insurance policies recommended for nearly all kinds of businesses. Essentially, a CGL policy protects you from massive financial loss in the event that your business is sued for the following: 

  • Third-party property damage;
  • Third-party physical injury within business premises; 
  • Third-party physical injury caused by business operations;
  • Third-party injury or illness due to served food/beverage or manufactured/sold products; and/or
  • Third-party reputational/advertising injuries.

In an increasingly litigious society, no business can afford to be vulnerable to third-party lawsuits stemming from the above causes. Depending on the extent of the damage and the legal services required, the costs can pile up and put the sued business in the red or worse—cause the business to shut down. This is why CGL insurance is considered a staple when it comes to business insurance. 

CGL insurance is so essential across various industries that it is often bundled with another vital type of business insurance, commercial property insurance. This bundle is what’s commonly referred to as a business owner’s policy (BOP).

Do I Need CGL Insurance?

In many regions, a CGL policy is typically not required by law. However, most businesses opt to have this type of insurance policy to help mitigate financial loss for various kinds of third-party lawsuits. 

Third-party lawsuits can come from customers, the general public, suppliers, other businesses, and the like. So if you, as a business owner or leader, are wondering if your company needs CGL insurance, consider the following questions: 

  • Do you have a physical office, store, restaurant, workplace, or storage site that third-party individuals frequent?
  • Does your line of business involve servicing properties or homes?
  • Does your line of business sell or manufacture products?
  • Do you operate a food service establishment that serves food and drinks?
  • Does your business regularly carry out marketing or advertising efforts?

If you answered “yes” to one or more of the questions above, your business will benefit greatly from the protection of commercial general liability insurance. 

In the next section, we’ll go into further detail on the coverage points of a CGL policy. 

A customer trips over a bucket of water in an establishment with no warning signage

What Does a CGL Policy Cover? 

Generally, CGL insurance policies cover the following: 

1. Physical Injuries Sustained by Third-Party Individuals

Physical injuries sustained by third-party individuals are covered by commercial general liability insurance. These injuries could either happen within your business premises or be connected with your business operations. 

However, note that CGL, by itself, is not intended for bodily injury relating to the operation of a commercial vehicle. The type of insurance needed for the latter is commercial auto insurance,  which can be bundled with a CGL policy.

In addition, third-party injuries or illness due to the release of pollutants is not within the scope of CGL insurance either. In this type of scenario, you will need pollution liability insurance, which can also be added to your insurance bundle.

Here are a few common examples of third-party bodily injuries that are covered by CGL insurance: 

  • A third-party individual slipping and getting injured within business premises.
  • A third-party individual injured by falling debris or high-powered tools used by the business’s employee.
  • A third-party individual falls down the stairs of an establishment.
  • A finished home repair project later breaks down and injures the homeowner.   

When businesses are held responsible for third-party injuries such as the above, a tailor-fit CGL policy saves the day by shouldering medical costs as well as legal expenses (to the extent of the policy’s coverage limit). 

2. Product Liability

CGL insurance policies also cover product liability. This makes CGL insurance essential for businesses that sell, distribute, or manufacture products—especially those that can harm customers if something goes wrong. 

In the same way, restaurants and other food-service establishments can also be covered if customers become ill due to their food and drinks.

In case a sold product, food, or drink injures a customer or causes them to get sick, CGL insurance covers the medical costs and legal expenses up to the policy’s coverage limit.  

3. Third-Party Property Damage

Commercial general liability insurance covers damages to third-party properties as well. This coverage point is especially beneficial for businesses that go to customer properties for services, repairs, installations, and renovations. Additionally, in case damage is inadvertently caused to property that does not belong to the customer (e.g. a neighbouring property), this is also covered by CGL insurance.

In the above scenarios, CGL insurance can cover repair or replacement costs up to the policy’s coverage limit.  

4. Reputational/Advertising Injuries

Nowadays, all businesses engage in some form of marketing and advertising. In case a business gets sued by another company or entity due to claims of reputational harm or advertising injuries, CGL insurance can cover legal expenses up to the coverage limit of the sued business’s policy.  

Protect Your Business With a Tailor-Fit CGL Insurance Policy

This wraps up our comprehensive guide on CGL insurance and what it covers. If you’re looking for commercial general liability insurance for your business, we’re here to help!

KASE Insurance is an award-winning insurance brokerage firm based in Toronto. Through the years, we have helped numerous businesses get the customized and fully transparent insurance that they deserve. 

If you want to secure your business with a reliable and hassle-free CGL insurance policy, our dedicated team is here to help you in every step—from negotiating premiums to following up on insurance claims.

Get started today by contacting our friendly team or request a FREE quote!

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