What Does A Commercial General Liability Policy Cover?

What Does A Commercial General Liability Policy Cover?

No matter what type of business you’re in, a Commercial General Liability (CGL) policy is one of the primary insurance coverages you should have. Even if you simply own a commercial property, a CGL policy should be part of your insurance program.

A CGL policy provides protection for you—the owner of a business or the owner of a property—against a broad class of liability claims that could be brought against you. These typically include claims by a third party alleging they suffered bodily injury, property damage, or personal injury.

For example, say the sidewalk outside of your business or property is slippery with snow and ice and someone slips and falls, injuring themselves. That’s a bodily injury occurring on or adjacent to your premises. If the snow wasn’t properly plowed, salted, or otherwise removed by you as it should have been, the injured person may hold you responsible for the costs associated with their injury. This may include medical expenses, pain and suffering, and lost income.

With a CGL policy in place, your insurer would hire and pay a lawyer to defend you against the claim, and if you were negligent, pay the settlement or judgment for damages. Most claims are nuisances, brought against business or property owners where there is no actual negligence. Nevertheless, you still need to defend yourself against claims even where you know you were not negligent. The CGL would cover the cost to hire lawyers to defend you against these nuisance claims as well.

CGL policies also respond to bodily injuries resulting from products you manufacture and sell and services you provide. For example, if your retail store sells soap and someone has a serious reaction to it such as anaphylactic shock, you may be held liable for their injury or death. Was the product labelled correctly? Was it manufactured safely? Likewise, if you own a gym and someone injures themselves using a machine improperly because the instructions were removed and not replaced, you could be on the hook for their injuries. It is uncomfortable to think about, but these types of incidents occur every day.

Another coverage CGL policies include is claims alleging property damage. If someone’s property—such as a vehicle or luxury item—is damaged as a result of your operations, a risk exposure on your premises, or a product or service malfunction and they hold you responsible

for the cost of replacing the property, it is your CGL policy that will respond and defend you and pay necessary legal fees or the costs of a settlement or judgment.

Say you are a plumber who improperly connects a waterline and it breaks and floods your customer’s house, requiring the flooring and contents to be replaced. Under your CGL policy, this is covered under your completed-operations hazard. Again, your legal fees will be covered by your insurer and any settlement or judgment for damages will be paid.

Lastly, your CGL policy will typically include personal injury coverage for allegations of libel and slander, as well as claims of false advertising. Note that if you are an advertising and promotions company, this coverage will typically be excluded from your Commercial General Liability, and you will need to purchase a special media liability coverage separately to cover these exposures.

Commercial General Liability Claims Process

You may be wondering how to file a claim under your CGL insurance policy, so let’s walk through the process. Typically, the first step is the receipt of an accusation or demand. Working with that plumbing example in the previous section, the first step would likely be a phone call from the homeowner to the plumber where the homeowner makes an accusation like, “My basement is flooded and it’s your fault. You didn’t install the pipes properly.” Now, at this point, it’s not known for sure that it’s the plumber’s fault, but there is an open allegation.

As soon as the insured—the plumber—is made aware of an allegation against them, they should be giving Waypoint a call, relating the details of the allegation, and reporting their stance on the situation. Waypoint will then report the claim to the insurer who will appoint an adjuster to investigate the claim. It is important to note here that the CGL policy is the plumber’s policy and not the homeowner’s. The contract is between the plumber and the insurance company, and the insurance company will work on behalf of the plumber to defend them, and if necessary, settle with the claimant.

In the meantime, the homeowner should make a property claim with their own insurance company who will pay to repair the house and replace the contents and pay any necessary additional living expenses. Their own home insurer will investigate the cause of the loss, and if they believe there is evidence the plumber was negligent, they will try and recover directly from the plumber (and their insurer).

The claims process is made easy with your team at Waypoint. If you find yourself in a position where allegations have been made against you and you need your CGL policy to respond in your defense, your Waypoint advisor is here to help. We will promptly notify your insurer of the claim to protect your interests, check in with you periodically to make sure the

claim is being handled to your satisfaction, and intervene on your behalf with the insurer to keep your claim on track.

Liability claims can take a long time to settle as the legal process plays itself out. But we want to be your claims advocate to make sure your claim is handled correctly. If you have any questions about the process or need to make a claim, contact us here or call 1-866-674-2816 and we’ll be happy to assist you.