Description

Commercial General Liability Insurance

Commercial General Liability insurance policy protects businesses against liability claims for bodily injury and property damage arising from business operations, products, or premises. It typically covers legal costs and settlements or judgments resulting from lawsuits filed against the business by third parties.

Why is Commercial General Liability Insurance Required?

The Problem

In today’s competitive business environment, companies are constantly exposed to various risks that could lead to costly legal battles and financial liabilities. The likelihood of lawsuits is substantial, from customer incidents on business premises to accusations of property damage attributable to products or services. Without adequate protection, businesses face the prospect of substantial financial strain and reputational damage arising from legal disputes.

The Solution

To address these challenges and ensure the financial stability of businesses, Commercial General Liability insurance (CGL insurance) is essential. By providing coverage for legal expenses, settlements, or judgments resulting from lawsuits filed by third parties, CGL insurance serves as a vital safeguard. It protects businesses against the potential financial devastation caused by liability claims related to bodily injury, property damage, or other legal disputes. Therefore, by investing in CGL insurance, businesses can mitigate their risks, protect their assets, and preserve their reputation in the face of adversity.

Who should buy Commercial General Liability Insurance?

If your business type matches any of these, this coverage is ideal.

• High customer traffic businessesRetail stores, restaurants, gyms, hotels, and similar professional services.
• ConsultantsArchitects, engineers, lawyers, accountants, and any other type of consultants.
• Businesses selling productsManufacturers, distributors, and e-commerce businesses that require coverage.
• Online operationsSocial media, websites, and other data-driven businesses.
• Other high-risk businessesConstruction, landscaping, event planning, transportation companies, & others similar businesses.

A Commercial General Liability insurance policy (CGL insurance) is an essential asset for various businesses, particularly those susceptible to heightened liability risks. Here are some of the businesses that could benefit from investing in Commercial General Liability insurance:

1. Small Businesses: This category includes startups and sole proprietors, who can leverage CGL insurance to shield themselves against unforeseen liability claims that might otherwise endanger their financial stability.
2. Retailers: Physical storefronts face inherent risks such as slip-and-fall accidents or injuries stemming from defective products. CGL insurance offers coverage for these potential incidents.
3. Contractors and Construction Companies: Construction entities, including contractors and subcontractors, confront diverse risks on job sites, ranging from property damage to bodily injury. Commercial General Liability insurance serves as a means to reduce these risks.
4. Service-Based Businesses: Service providers like consulting firms, advertising agencies, or IT companies may encounter claims related to service errors or omissions. Commercial General Liability insurance provides a safeguard against such claims.
5. Manufacturers: Manufacturers face the threat of liability claims due to defects in their products, leading to bodily injury or property damage. Commercial General Liability insurance extends coverage for product liability claims.
6. Healthcare Providers: Healthcare professionals and facilities, such as doctors, clinics, and hospitals, recognize the importance of Commercial General Liability insurance for defending against claims of third-party bodily injury within hospital premises.

Who Gets Covered Under Commercial General Liability Insurance?

Commercial general liability policy (CGL insurance) provides coverage for the following:

• Sole Proprietors: Individuals operating businesses on their own, with full responsibility for their business’s operations and liabilities.
• Partnerships, Joint Ventures, or Unincorporated Entities: Groups of individuals or entities working together on ventures, sharing responsibilities and potential liabilities.
• Employees: Those working within the organization are covered for their actions within the scope of their job duties.
• Subsidiaries or Recently Established Entities: Newly formed or acquired organizations that are under the coverage umbrella of the main entity.
• Other Organizations: Encompasses a range of entities, excluding partnerships, joint ventures, or unincorporated entities, and includes a diverse array of incorporated organizations.

Commercial General Liability Insurance Coverage

The common inclusions that most of the commercial general liability insurance plans provide to its policyholders are:

What is Covered?

• Injury on insured premises
  If a customer or business partner sustains an injury on the company’s premises, the company is responsible for related costs. Commercial general liability insurance policy offers financial coverage to address these costs.
• Injury by a product
  The company is accountable if manufactured products lead to bodily harm to customers. This policy provides financial coverage in such cases.
• Property damage
  If a company’s product or service causes property damage to third parties, a general liability insurance policy covers the related expenses.
• Advertising error
  Miscommunication leading to customer losses, like inadequate warnings or copyright issues, is covered by commercial general liability insurance.
• Completed operation
  Certain policies extend coverage even after project completion. For instance, if a completed construction project later causes problems and damages, the policy covers the associated costs.
• Injury by services
  If a customer sustains bodily injury due to errors or omissions in services rendered by the company, commercial general liability insurance offers financial coverage for related expenses.

What is not Covered?

• Product recall
  Coverage is not extended to expenses related to product recalls, which might arise due to defects or safety concerns.
• Deliberate non-compliance
  Losses resulting from deliberate, willful, or intentional violations of statutory regulations are not covered under a commercial general liability insurance policy.
• Cost of reconditioning/repair
  This policy does not include costs for reconditioning or repairing products.
• Product guarantee claims
  Claims stemming from product guarantees are excluded from coverage.
• Pure financial loss
  Pure financial Losses, like loss in market share, are not covered under a commercial general liability insurance policy.
• Damage to own product
  The policy does not cover damage to the insured’s products.
• Product Manufactured or Domiciled in USA/Canada
  The products manufactured or domiciled in the USA or Canada are not covered.

*Note: Exclusions within commercial general liability insurance policies can differ significantly between insurers. To tailor a plan that meets your business’s specific needs, you can connect with our team of experts at Policybazaar for Business. We’re here to help you craft a customized insurance solution that offers comprehensive coverage.

Commercial General Liability Insurance: Add-ons

Here are the add-ons that insurance companies provide with commercial general liability insurance policy (CGL insurance):

• Act of God: This coverage protects against damages caused by natural disasters or other uncontrollable events like earthquakes or hurricanes.
• Food & Beverage Liability: This insurance shields businesses from liability claims arising from food-related illnesses or injuries caused by consuming their products, typically vital for restaurants, caterers, or food manufacturers.
• Sudden & Accidental Pollution: This add-on is designed to cover unforeseen pollution events caused by business operations.
• Lift Liability: Lift Liability insurance safeguards businesses operating elevators or lifts from liability claims related to accidents or injuries occurring on their premises due to lift usage.
• Travel of Executives: This coverage extends protection to key personnel during business travel, encompassing medical emergencies, trip cancellations, lost luggage, and other travel-related risks.
• Non-owned or Hired Automobile Liability: Non-owned or Hired Automobile Liability insurance covers liability risks associated with vehicles not owned by the business but used for its purposes, like employee-owned or rented vehicles.

What is Required to Purchase Commercial General Liability Insurance?

Here are a few things that an insurer would require before selling commercial general liability insurance (CGL insurance):

• Size of Business
• Yearly Revenue
• Claim History
• Business Operations
• Previous Insurance Details, if any

Commercial General Liability Insurance: Claim Process

Here are the steps that you will have to follow to raise a claim under commercial general liability insurance (CGL insurance):

1. Notify Your Relationship Manager: Promptly inform your dedicated relationship manager about the incident to kickstart the claim process effectively.
2. Complete and Submit Claim Forms: Fill out the provided claim forms and submit them to your relationship manager to formally initiate the claim procedure.
3. Evaluation and Claim Registration: Your submitted information will be promptly forwarded to the insurance company for thorough evaluation and registration of the claim, resulting in the issuance of a unique claim reference number.
4. Appointment of Surveyor: Upon claim initiation, the insurer will appoint a competent surveyor to assess the situation and ascertain the extent of the damages.
5. Documentation Submission: Upon survey initiation, the appointed surveyor will guide you through the required documentation process. Submit all necessary documents as instructed for efficient claim processing.
6. Claim Approval and Funds Disbursement: Once the evaluation process is complete and your claim is approved, the insurance company will promptly release the claim funds to you for timely resolution of the incident.

Documents Required for Comprehensive General Liability Insurance Claim

Below are the essential documents needed to file a claim for Comprehensive General Liability insurance:

1. KYC Documents:
   • PAN Card
   • Aadhar Card
2. Business Registration:
   • GST Registration Certificate
3. Incident Location Address Proof:
4. Electricity Bill

Things to Consider When Purchasing a Commercial General Liability Insurance Policy

When purchasing a Commercial General Liability insurance policy, one crucial decision to make is determining whether you prefer a claims-made or an occurrence policy. To gain a comprehensive understanding of these options and their implications, let’s explore the differences between them:

1.      Claims-Made Policy

In a claims-made policy, coverage is activated when a claim is filed against the insured during the policy period, regardless of when the incident occurred. This policy type responds to claims made and reported within the policy term but may have limitations on coverage for claims reported after policy expiration.

2.      Occurrence Policy

An occurrence policy provides coverage for incidents that occur within the policy period, regardless of when the claim is filed. Coverage is triggered by the occurrence itself during the policy term, offering long-term protection for claims arising from past events, even after the policy expires.