What damages are covered by a CGL policy? Commercial general liability insurance offers financial protection for businesses against third-party claims of bodily injury and property damage.
What Damages Are Covered By A CGL Policy?
Commercial General Liability (CGL) Insurance is an must for any business or commercial entity. It's a cost saving necessity for owners and employers who need to protect against lawsuits, especially where employees and third parties are in danger of damage. Corporate policyholders are protected by CGL against any claims for bodily and property damage, the cost of which can destroy a business without the proper indemnity coverage.
What damages are covered by a CGL policy? CGL policies are pretty standard, but can change depending on the jurisdictional needs of the business. However, they generally tend to respect the same national format and cover similar topics. This list is a broad overview of what a typical policy would cover.
Legal language can vary depending on the drafter and location, but generally, the insurance company pays for everything that was agreed to be insured at the time that a third party or employee sues the employer for damages as a result of bodily injury or property damage. The insurance company also reserves the right to defend themselves against a claim where they feel it is unwarranted or out of the scope of the agreement.
What damages are covered by a CGL policy? But essentially, the policy comes into action when there is an occurrence of damage or injury to a person or property at the time that the policy is in place (not when the lawsuit eventually rises). The insurance company owes the business a duty to defend against these claims and to indemnify them of any damages that they agreed upon in their initial agreement.
But what does all of this mean? Basically, your insurance company pays for any damage that occurs during the time you are paying them, not for anything before or after. And they will only pay for something that usually falls into one of these three categories:
Bodily Injury and Property Damage
Bodily injury damage and property damage insurance gives any business protection for legal liability they may have triggered from acts that were negligent, including non-professional acts outside of regular business, as long as they were done on your property or place of business operations.
Basically, loss of property or ability to use it, or physical harm to a person is covered under this policy, even where you were negligent and the cause of such injury. The meaning of bodily injury differs by jurisdiction; so, make sure your insurance plan is broad if you are in a state that also covers emotional distress claims as well.
Medical Payment Coverage
Where a person has been injured, whether an employee or a member of the general public, your CGL insurance should cover any medical expenses they incur as a result of an accident on your premises or during your operations. However, and this is important, they generally have to be reported within a year's time of the incident. The party does not necessarily have to sue you; you can also choose to settle without going to litigation if it's in your company's best interest, and your insurance should cover it.
The test for the expenses your company covers is generally that of reasonability, such as medical, hospital, or nursing expenses. This can sometimes even include funeral expenses, where a person has unfortunately died as a result of an incident or accident on your premises.
Personal and Advertising Injury
Personal and advertising injury covers any injury that comes as a result of your advertising and marketing of your goods and services. This is a broad area of injuries that can include libel, slander, misappropriation, and copyright infringement. It is important to note that this part of your coverage can be subject to various exclusions, and not likely cover any intentional injuries on your part. An insurance company is not likely to foot the bill when you have gone out of your way to commit these injuries.
But even more so, there can often be over 10 exclusions per policy for this section alone (it's very limited), and the limits that a company is willing to pay are different than that of the other two sections. This is what makes this part of your policy so unique. What damages are covered by a CGL policy? It's important to have a discussion with your provider about what exactly you are covered for before taking any risks of going outside the policy. Oe note - pollution legal liability is almost universally excluded from commercial general liability policies.
Commercial General Liability Insurance Limits
It is important for businesses to understand how the limits of liability apply in the commercial general liability policy. The 2 most basic limits are:
Occurrence Limit - This is max that would be paid out on any one loss that occurs during the policy term.
Aggregate Limit -This is the most that would be paid out any one policy period (usually one year). It is moat commonly two2 times the per occurrence limit.
And the are usually written like 1 million per claim, 2 million aggregate (1,000,000/2,000,000).
What Damages Are Covered By A CGL Policy? - The Bottom Line
We hope this article on what damages are covered by a CGL policy? has been informative. Overall, this is a brief overview of the sorts of things a CGL can cover, but it varies by contract and by state. In order to get a more detailed view of your policy, the best strategy is to speak directly with a broker or agent.
Further Reading On Commercial General Liability Insurance
- CGL Exclusions Explained
- Contractors General Liability Insurance
- Difference Between General Liability And Auto Liability Insurance
- Does General Liability Insurance Cover Subcontractors?
- General Liability Insurance Claims-Made vs Occurrence
- Product Liability Insurance vs General Liability
- What Damages Are Covered By A CGL Policy?
- What Does Personal And Advertising Injury Mean?
- What Is A Premises And Operations Insurance Policy?
- What Is Damage To Premises Rented To You?
- What Is Products And Completed Operations Coverage?
- What Is The Difference Between Per Occurrence And Aggregate Liability Limits?