It is necessary for a business in today’s times to get Commercial General Liability (CGL) insurance. As an insurance policy, commercial general liability insurance offers a company coverage against property damages, personal injuries, and bodily injuries resulting from operations on its premises. Third parties like customers are highly likely to sue businesses with charges for property or body damages. Information on company advertisements has often been misrepresented and held responsible for minor accidents such as people slipping on floors.
Essential for Survival
Companies that purchase commercial general liability insurance cost are the only ones that will survive. Despite minor injury incidents, adverse court judgements have directed companies to pay significant sums to defend such claims and provide compensatory damages. If any-thing else, such incidents are expected to become more common.
Typical situations for which businesses may have to pay legal, medical, punitive, and compensatory amounts are:
- A class action complaint filed against the company that alleges false information from advertisements, as mentioned above
- Significant damage to a customer’s home by an employee at a construction or painting company by accidentally leaving water running
- Consumer tripping over loose flooring while visiting an establishment and getting injured, as mentioned above
Coverage as per Commercial General Liability Insurance
Businesses can expect a CGL insurance policy to cover legal defense costs. The policy also pays for damages as per designated limits proved right in court. CGL is a critical insurance product to counteract the detrimental effect lawsuits can have on a corporation, which includes the frequency of cases. Even if there are no physical bodily impairments, mental and emotional discomfort can be termed bodily injuries.
Worker compensation and employment practices liability insurance are not included in the package but can be acquired separately. Furthermore, pollution liability is not covered and can be added as an endorsement. However, high-risk enterprises should consider acquiring their environmental liability insurance because this coverage is so restricted. Other risks, such as liquor and professional liability, may also be excluded. An insurance specialist can help decide which endorsements are appropriate for a business.
Details of CGL Coverages
- Coverage A- Property Damages and Body Injuries
Legal liabilities for the insured due to property damages or body injuries caused by negligent or non-professional acts or liabilities coming from their business activities or premises are covered here. It covers emotional and mental problems resulting from the above without physical body impairments, too, as mentioned earlier.
High-risk enterprises should consider acquiring their pollution liability insurance. Such enterprises may also remove other risks, such as liquor and professional liability. An experienced insurance specialist can assist in determining which endorsements suit the business best.
- Coverage B- Advertising and Personal Injury
The above coverage is meant to provide protection from the following:
- Arrest without Authority
- Slander Libel
- Wrongful Eviction, Entry or Invasion of Privacy
- Infringing Upon Another Business’s Copyright
- Utilization of a marketing concept created by someone else
- Coverage C- Making Medical Payments
Payments for injuries incurred by a non-employee that is caused due to an accident on the insured party’s premises or while exposed to the insured’s business operations are covered under Coverage C, meant for making limited medical payments. Medical payments insurance can be activated without the need for judicial action. This policy allows quick settlement of modest medical claims without the need for litigation.
Under CGL insurance, Coverage C pays for all reasonable and necessary surgical, medical, ambulance, professional nursing, hospital, and even burial expenses for a person wounded or dead in an accident on the insured’s property or as a result of company operations.
As all CGL coverage is given on a non-fault basis, there is no need for legal liability or defense protection here, unlike Coverage A and B.
Buying a CGL Insurance Policy
CGL can be bought either as part of a Commercial Package Policy (CPP) or as a component of a Business Owners Policy (BOP). Business owners must consult their insurance agents to determine the type and amount of coverage they require. If either of the above are inadequate, a Commercial Excess (Umbrella) policy should be able to give additional coverage. The purchase must be made from an insurance provider which has been in the market since many years.
Other than three coverages under CGL, businesses can also get the following additional insurance plans:
- Fire Damage Cover
- Transport Liability Cover
- Extension for Medical Expenses
- Limited Vendors Liability Cover
- Extension for Personal and Advertising Injury
- Extension for the Act of God Perils
- Lift, Escalator, and Elevator Liability Extension
Reduces Financial Risks
From the above pointers, it is natural that a CGL policy brings down the financial risks to a business in India. However, before making a purchase decision, company owners must consider all elements of the policy and confirm that they fit the business’s requirements to a T.
