Commercial General Liability Insurance

Commercial General Liability Insurance Policy (CGL) protects your organization and your business against any liability arising due to bodily injury, property damage or any personal injury caused to a third-party. This essentially means that if your company, product, work, or anything which is associated with your business causes injury to a client (any person) or their property, you could be legally held responsible for it. In such a scenario you may also be required to pay a hefty compensation and this is the time where CGL can come to your rescue.

Commercial general liability policy covers defense cost and the compensation awarded by court for above legal liabilities. Defense cost will include the cost of lawyer fees incurred to defend the company against legal suits.

There are two types of CGL policies:

• Claims-made Policy: a claims-made type of CGL policy provides coverage when a claim is made, irrespective of the time of occurrence of the claim event. This type of cover is efficient for a type of claim when there is a difference in date or there is a delay between the occurrence of the event and date on which the claimant filed the claim. But not to forget here that the policy only covers for the claims that are made when the policy is active. The date of first coverage is defined as the retroactive date. On subsequent renewals of the policy, the retroactive date would be mentioned to denote continuity in coverage.
• Occurrence Policy: an occurrence policy type of CGL insurance covers for all the claims made for injuries sustained during the period when the insurance policy is live. Under such a contract, the insured can request for compensation for the damages that have occurred during the policy period.

One example of CGL plan can be as follows.

M.R Textiles Ltd. has got a large international order worth INR 50 Crores. The foreign company insists on sending Mr. Jack, a senior employee, to the manufacturing unit of M.R. Textiles Ltd. for a thorough scrutiny of the stocks. Mr. Jack, while moving around the manufacturing units, trips and falls hurting his back.

Now the client sues M.R. Textiles Ltd. arguing that they should have taken care of the work premises. Luckily, M.R. Textiles had a CGL policy bought which covered the compensation as well as the legal costs involved.

Below are the benefits of commercial liability insurance.

Claims for Physical Damage Liability

• Commercial liability policy covers premises liability by paying for claims from third parties for bodily injury or death suffered in office or factory premises. For example, a guest may slip due to the wet floor in your office premise, and sue for subsequent injuries.
• CGL also covers claims for 3rd party property damage such as waste from your plant seeping into a neighborhood factory.
• The Product liability coverage pays for physical damage or injury to a third party due to malfunction of your product.

Damage to Property in Custody

• CGL offers an add-on called Care Custody and Control. Hereby, goods kept in the custody of the insured are injured against any damage. The sum assured is sub-limited within the overall policy limit.
• Similarly, rented premises can be covered for Fire Lightning and Explosion damages (FLEXA perils). Specific sub-limit is assigned for this cover.
• Valet parking for Hotels and Restaurants can be covered. Parking has to be within designated premises under the supervision of the parking/security agency authorized by the hotel.

Add-Ons

• Commercial public liability offers unique add-ons to expand the scope of coverage. For example, medical expenses incurred for a third-party bodily injury at designated premises can be covered. A sub-limit is defined for the amount payable per person.
• Extended premises such as swimming pool, cafeteria, health clubs, sauna and Spa, can be covered via a separate add-on.
• Hotels & Restaurants can buy add-ons for Food & Beverage, and Liquor liability. Claims arising due to consumption of such materials at the insured premises can then be covered.

A small disruption in your business can mean huge financial loss. Below are the reasons why you need to buy a commercial general liability (CGL) insurance:

• CGL insurance protects you from third-party claims involving bodily injury and property damage due to negligence
• A general liability insurance also pays for the medical expenses arising due to physical and mental injuries or shock
• A commercial general liability insurance policy also reimburses for advertising infringements such as copyright issues, trademark breaches and so on

A proposal form is an essential document for obtaining a general liability policy or plan. Below are some important points to be noted here:

• A duly filled proposal form is required for obtaining a commercial general liability insurance only for your premises
• A duly filled proposal form along with list of products, if product liability cover is also required with the CGL policy

Below are the list of coverages under a cgl plan:

• Bodily injury: this includes disability or death caused to a third-party.
• Property damage: this includes partial and total damage to third-party’s property.
• Advertising injury: this includes trademarks and/or copyright infringements.
• Lawsuits, investigations and settlements: in case any lawsuit is filed against you, under a cgl insurance, the insurer pays for the investigation and attorney charges.
• Medical expenses: A cgl insurance policy also pays for any medical expenses incurred due to an injury caused by virtue of operations of your business.

Below is a list of exclusions under CGL plan:

• Willful and expected injury
• Contractual liability
• Worker’s compensation and similar laws
• Damage to insured’s own property

Note: This is just an indicative list. Please refer to your policy document for details of the exclusions.