One of the most important insurance covers that any responsible business organisation is expected to avail is the Commercial General Liability policy (CGL Policy). It is a protection provided to business organisations for expenses incurred due to third-party (non-employee) liabilities.
These include mainly the claims or medical expenses of third-party due to accidental damage or loss of property or Bodily Injury (BI) suffered in the business premises, operations and completed operations in India. It also includes the claims made on the insured due to harm by its manufactured or sold products, infringement of copyrights, reputation damage or privacy invasion.
This policy covers you irrespective of the kind of business you run. For example, if you are in a partnership business, then all the expenses incurred due to claims made on a partner, member and their spouses for something they do in official capacities are covered under it. In case if you have subsidiaries; this cover extends to the liabilities incurred by those subsidiaries of which you own at least 50% stake.
Further, it also includes expenses arising out of unexpected lawsuits by various third-parties connected to your organisation like vendors, customers, volunteers, clients, contracts, etc. These costs may include the following:
- The cost of investigating or defending a suit or a claim made against you. This may lead to court costs, witness fees, attorney fees, etc.
- The loss in business revenue suffered due to time spent in the court or in judicial procedures
- Settlements of cases that include interest payments on the judgement and medical expenses of the injured party.
- Premium on a bond, made mandatory by the court, connected with the liability suit
All such provisions will be automatically applicable to your policy cover during the first 90 days after availing it. After this period, you will need to update the provisions that you require the most.
Now, let’s focus on some key provisions where your commercial general liability insurance can come in handy in case of any emergency:
- Third-party Bodily Injury/Property Damage:
If any third-party is injured in your premises due to slipping, falling or getting electrocuted due to a loose wire connection, you may be held responsible for the accident. The CGL policy will enable you to bear the medical expenses in such cases. Moreover, if unfortunately, such an injury leads to death, then the court-awarded compensation can be availed under this cover.
Third-party property damage expenses are also included in this policy. These include repair, replacement and renovation costs in case of accidents like damage to the phone, laptop or any such expensive item belonging to a third-party excluding your employees. The cover also applies to paying up for the renewal of attached building, part of which may have been destroyed due to an accidental fire in your premises.
- Product quality compromise
Product quality always remains on the priority list for most businesses. However, if any harm is incurred by a third-party by using your products, due to low product quality, it can land you in trouble!
The policy will cover the resulting legal expenses as well as the cost of damages caused up to your policy limits.
- Advertising Strategies Went Wrong
If anytime in your business operations, intentionally or unintentionally, you indulge in copyright infringement of some other product’s logo or tagline, a CGL policy will be a great reliever.
Such cases also include libel or slander on your part when you may indirectly harm the rival’s reputation in a written or spoken statement respectively.
The policy incurs all resulting legal liabilities, settlement expenses and protects your business from shutting down due to a minor ignorance on your part.
- Intentional or unintentional invasion of privacy
A General Liability policy protects your business from costs incurred due to the invasion of privacy of any third-party. An example of this can be you notice a celebrity using your product and commit the mistake of taking it as an endorsement. It may also happen that you approach the celebrity and since the terms are not discussed properly, there may be a misunderstanding leading to the invasion of privacy on your part.
A CGL will help you to incur the legal or out-of-court settlement costs in such a case.
- Liquor Liability
Some CGL policies include alcohol responsibility for businesses which do not manufacture, sell or distribute alcoholic beverages. The policy covers you for any liquor-related accident in your business premises. It comes in handy as liquor is generally used on company picnics and parties where such accidents may happen.
The costs of such accidents may also lead to complicated lawsuits, landing the company in trouble. So, it is feasible to add this provision in your policy cover to remain completely safe.
- Contractual liability and auto coverage:
If you enter into a written agreement with an individual or company to indemnify them in case some mishap occurs with them, most CGL policies will cover such costs. It also includes liabilities that arise when you enter individual contracts like building leases, elevator maintenance agreements and easement-of-licence agreements.
Some companies also include the hired auto and non-owned auto coverage in their CGL policy. This means that if you do not have any vehicles in your business’s name and rent cars from rental companies, the policy will cover the liability part of the lease contract. On the other hand, if you are using a personally-owned vehicle for business purpose and you meet with an accident leading to damage to third-party property or bodily injury, non-owned auto coverage will cover the liability arising on you; should the company be sued, in such a case.
So, you must be aware all these essential things are covered in your Commercial General Liability Policy and must expect to meet any such third-party liabilities in case of unexpected accidents in your business premises. However, also be aware of your policy limits and the exclusions of this cover so that there is no confusion at the time of making a claim.
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