Understanding Commercial General Liability Policies

By Myers Longhofer, LLC
Hands Protecting Commercial Business Building, Insurance Concept

We know that running a business carries its fair share of risks. The threat of potential legal battles and financial losses caused by accidents or oversights can be stressful for business owners. That's where our team at Myers Longhofer, LLC steps in. Our aim is to arm you with vital knowledge about commercial general liability (CGL) insurance policies, helping you safeguard your venture from unexpected pitfalls

What Is Commercial General Liability Insurance?

Commercial general liability insurance is a broad coverage policy designed to protect businesses from damage or injury claims resulting from their operations, products, or premises. It offers a safety net against allegations of bodily injury, personal injury, and property damage, making it an essential consideration for businesses across various sectors and sizes. 

Two primary types of CGL policies exist: claims-made policies and occurrence policies. Claims-made policies cover claims made during the effective date of the policy irrespective of when the event that is alleged to have caused the damage or injury took place, whereas occurrence policies cover claims only if the event happened during the period the insurance policy was in place. Understanding the distinction between these two types is crucial when choosing the best coverage for your business. 

Businesses also have the option to include other companies or individuals they work with as "additional insured" on their commercial liability insurance policy. This inclusion extends the coverage to any claims that might stem from these additional parties' actions. It's a significant factor for businesses that frequently collaborate with contractors, vendors, or other third parties. 

What Does Commercial General Liability Insurance Cover?

A commercial general liability policy typically covers the cost of damages resulting from your business's operations or defending a lawsuit regarding a covered claim. The coverage often includes bodily injury, property damage, and personal injury claims like libel or slander, although each policy is different and may be exclusions about which a business owner needs to be aware. This insurance also shields businesses from claims related to advertising injury, such as copyright infringement or false advertising. 

It's essential to remember that commercial general liability insurance doesn't cover intentional damages or accidents involving automobiles, aircraft, watercraft or cyberattacks on a business' computer or IT system. These types of risks may necessitate additional insurance coverage (often known as a "rider") specific to those types of claims. 

Special Considerations

When procuring commercial general liability insurance, several key considerations come into play. One of the primary factors is whether you need a claims-made policy or an occurrence policy. Grasping the differences between these two types of policies can help you decide which one is the best fit for your business's needs. 

Another crucial consideration is the level of coverage needed. The amount of coverage required will hinge on various factors, such as the size and nature of your business, the industry you operate in, and the potential risks linked to your operations. It's vital to evaluate your business's specific needs and collaborate with a seasoned insurance professional to determine the appropriate coverage limits. 

Moreover, businesses should meticulously review the exclusions and limitations of their commercial general liability policies with their insurance agent, broker or lawyer. Insurance police coverage exclusions can vary based on the insurance provider and policy terms. Understanding what your policy doesn't cover is critical to avoid unforeseen complications when making a claim.  Myers Longhofer, LLC has attorneys experienced in reviewing insurance policies and advising businesses on the potential limitations of their coverage so that our clients can make informed decisions about the coverage and protections needed.

Examples of Commercial General Liability

To better understand how commercial general liability insurance operates, let's consider a few scenarios: 

  1. A customer slips and breaks a leg at a business premises where the floors have recently been cleaned and polished. In this case, the business's commercial general liability policy might cover the cost of medical expenses, lost wages and any related legal claims. 

  1. An employee of an electrical company accidentally causes a fire while working on a wiring job at a customer's home. The resulting property damage and potential injuries may be covered by the business's commercial general liability insurance. 

  1. A business publishes an advertisement that leads to an individual claiming libel or slander. The legal costs associated with defending against this claim might be covered by the commercial general liability policy. 

  2. A business's computer system is compromised by hackers and confidential client information is stolen. Damages related to such a cyberattack are likely NOT covered unless a cybersecurity rider has been purchased.

These examples underscore the importance of having commercial general liability insurance to safeguard your business from potential risks and financial losses. 

Knowledgeable Legal Guidance

Understanding Commercial General Liability Policies is a crucial part of running a successful business in today's unpredictable landscape. At Myers Longhofer, LLC, we're dedicated to providing our clients with comprehensive knowledge and support, helping you make informed decisions that protect your business. With our team of experienced attorneys by your side, you can navigate the sometime complicated decisions surrounding your insurance needs with confidence.