Commercial General Liability (CGL) insurance is a type of insurance that provides coverage to a business or commercial entity in the event that the operations, products, or services of the business cause personal injury, bodily injury, or damage to property owned by a third person. It can also include in its coverages any injuries that may happen within the premises of the business covered.
Commercial general liability insurance is classified as a comprehensive business insurance, even if it doesn’t really cover all potential risks that a business may encounter.
Claims-Made vs. Occurrence Policy
There are two types of commercial general liability insurance policies. The first one covers claims regardless of the time when the event covered took place. This is called a claims-made policy. Even if the event occurs after the duration of the policy, the specific event is still covered if it was included in the claims-made policy.
The second type of CGL includes only events which are covered if they occur within the period covered by the policy. This type of CGL is called an occurrence policy.
If there are other parties or potential risks which aren’t covered by the original CGL policy, the covered business or commercial enterprise can add to their CGL coverages other companies, individuals, and parties, with whom they transact. These other parties or risks would be added to the CGL insurance policy as their “additional insured.”
Ways To Reduce Risk
There are several ways that commercial general liability insurance can reduce the risk to a business posed by its transactions with other persons and the potential injuries that may be caused to third persons. Here are a few of those ways that a CGL insurance policy can reduce the risk posed by potential bodily injury to third persons:
- Potential Injury Caused By Products
One of the most useful ways that commercial general liability insurance can help reduce the potential risk of bodily injury to third persons is by covering the products of the company. Regardless of the products manufactured by your company, whether they’re large or small, they can potentially cause injury to third persons such as those who buy and use them. For instance, the manufacturer of electrical products and equipment can cause potential harm and injury to third persons such as their buyers and those who didn’t buy their products or equipment but, one way or another, ended up using these.
Home use electrical tools and equipment can cause potential harm to the kids in the family who might get their hands on such products and equipment and suffer electrocution. If something happens to the child who got electrocuted, the business has a potential product liability lawsuit in its hands.
Another example is when your company manufactures floor cleaning products such as floor care or marble shiners. If one of your products is used by a hotel in the upkeep of their lobby flooring and marble and one of the guests slips, then your company can be held liable. If there are no other potential causes attributable to the hotel or its staff, then your company may be facing a potential claim for compensation or it might even be impleaded in a lawsuit for compensation or damages.
- Potential Injury Caused By Workers
Another useful way that commercial general liability insurance can mitigate the potential risk of injury to a third person is when your workers perform work in the premises of another company or in a home, and it causes injury or damage to those persons. An example is when your construction company uses heavy equipment in a construction site. If your workers commit an error in the construction site leading to the injury of a passerby or someone who lives in a neighboring house, your company can be held liable. If a beam slipped from a crane being operated by your worker, and part of the debris causes injury to a passerby or a resident of a house neighboring the construction site, then you’ll be made to pay for damages.
Another example is when your workers are just delivering the product or item which a customer ordered from you. If, in the course of delivering the product at the home of the buyer, your workers accidentally slip and the load that they’re carrying into the buyer’s home falls on a child or on a valuable item within the residence. In this instance, you have another potential claim for damages or lawsuit in your hands.
- Potential Injury Within Your Premises
The third example of a potential risk which can be covered by a commercial general liability insurance is the physical injury which may be suffered by a customer or client who visits your office or company premises. For example, a patient was brought to the hospital by family or friends. On the way to the elevator, one of the family members slips due to a wet portion on the floor or, worse, due to a disrepair on the floor. If the person who slipped suffers bodily injury, then you have a potential claim for reimbursement of hospital expenses or damages or both in your hands.
Another example is when your company operates a shopping mall or supermarket where a lot of people come and go. If one of the products on the stalls leaks onto the floor and another shopper slips because of the wet portion on the floor, then you may be facing potential claims for compensation or reimbursement of hospital expenses. The shopper may even file a suit for damages.
If, on the other hand, you don’t operate the mall, but you manufacture the product which leaked on the floor and created a wet mark, you might also be liable for potential compensation or reimbursement. If the container isn’t supposed to leak yet it did, then they can say your packaging is defective and your company is partly to blame for the injury suffered by the shopper who slipped.
Covering Your Risks
Getting a commercial general liability insurance policy can significantly reduce the potential risk your company may face in the event of an injury caused to a third person if such is attributable to your company, your products, or your workers. Awards of torts might vary from one state to another, but getting a CGL can help cover those costs if someone does get injured.