Commercial General Liability Insurance
In the course of doing business, you interact with employees, contractors, clients,
vendors, and others. Any one of them could claim that your business caused them
injury or loss and take legal action against you. Whether you need to defend yourself
against claims of property damage, bodily injury, libel, slander, or something else,
your General Liability Insurance policy would cover you.
What Is General Liability Insurance?
Commercial General Liability Insurance protects small-business owners from claims
of injury, property damage, and negligence related to their
business activities. The indemnity provided by a liability insurance policy helps
your business owner cover the costs associated with mounting a legal defense.
In addition, many small-business owners find that their clients
require them to have General Liability Insurance (sometimes referred to Commercial
General Liability, or CGL, insurance) before they’ll sign a contract. This means
that having the right coverage in place can make a significant difference in a business
owner’s ability to land clients and bring in revenue.
How Commercial General Liability Insurance Protects You and Your Business
In simple terms, a Commercial General Liability Insurance policy protects your business
by providing the financial resources necessary to keep it operational when unexpected
events (such as a client injury that leads to a lawsuit) throw a wrench in your
plans. Read on for the specific costs your CGL policy covers.
Costs Covered by Commercial General Liability Insurance
A general liability insurance policy provides financial protection from the risks
that any business owner, no matter how careful, might incur. A typical policy covers
the following expenses:
- The costs of defending or investigating a suit or claim against you, including court
costs, witness fees, attorney's fees, and police report costs
- Reasonable expenses incurred when the insurance company asks you to assist in your
defense (e.g., income lost while spending a day in court)
- Judgments or settlements resulting from covered suits, including interest required
on the judgment and the injured party’s medical expenses, if your defense is unsuccessful
- The premium on a court-mandated bond connected with a liability suit
People Protected by General Liability Insurance
A general liability policy insurance policy covers you, of course, but it also covers
many of the other people involved in your business:
- If you have a joint venture or partnership, all of your partners, members, and their
spouses are protected if they are sued for something they do in an official capacity
related to your business
- If your business is a corporation, your policy covers all of your business’s executive
officers, stockholders and directors while they are acting in their official capacities
- If you have subsidiaries, your policy’s liability coverage extends to any subsidiary
where you own at least 50 percent of the stock
- Your policy protects your employees from claims that result from actions they take
in their capacity as employees
- If you have a written agreement to indemnify a person or organization, such as a
vendor, that person or organization would be protected against liability claims
for property damage or bodily injury as a result of selling or distributing your
- During the first 90 days after you acquire a new business, it is automatically covered
by this policy. After that time frame, you would need to update your policy to continue
this protection for the new part of your business
- People legally associated with your business, including volunteers working under
your direction, are covered for liabilities that result from the work they do for
you, and for the use or maintenance of your property that is in their care
- If you’ve read this far, you deserve a pat on the back, or in this case, a free
t-shirt. Click here and we’ll send you one.
Specific Coverage Offered by General Liability Insurance
It may be difficult to imagine how your business could cause another person serious
harm or even death. But it’s good to know that if you are ever held responsible
for someone else’s sickness, injury, or disease, your general liability insurance
policy would pay for:
- Medical care costs
- Loss of services
- Court-awarded compensation for deaths that result from an injury
Even if you’re careful and take precautions, it’s still possible that something
your business does – or something it doesn't do – could damage another person’s
property. It’s also possible that your actions might prevent the property’s owner
from being able to use it. In such cases, your business liability insurance coverage
- Physical damage to the property, or
- Loss of use of the property
It is important to note that property damage liability coverage often does not cover
damage caused to client property you are working on or have in your possession.
Commercial general liability insurance policies generally include liability protection
for services or products completed by your company. So if something your company
manufactures or a service your company provides causes an injury, your policy would
pay for any resulting legal expenses, as well as damages up to your policy's limit.
Your commercial liability insurance coverage would cover liability you might take
on when you enter into various contracts, such as:
- Easement-of-license agreements
- Building leases
- Elevator maintenance agreements
- Agreements to indemnify a municipality, if required by ordinance
If you do not manufacture, distribute, sell, serve, or furnish alcoholic beverages
as a business, your general liability insurance policy will cover you if are held
liable for a liquor-related accident. If you distribute alcoholic beverages occasionally,
such as at a company picnic or office holiday party, you’d also be covered - as
long as you don't charge money for the alcohol.
It’s important to know that if an employee should sue you over an injury on the
job, your commercial general liability insurance policy would not cover the damages.
For this type of coverage, you need a workers' compensation policy.
Fire, Explosion, or Lightning Damage
The property insurance portion of your general liability insurance covers damage
you may cause to other people’s property as a result of fire, lightning, or explosion,
whether you own your business property or rent it. This coverage even applies to
other areas in your building that may be damaged as a result of negligence on your
part. Let’s say a fire in your office on the building’s second floor causes damage
to another company’s offices below. Your liability policy will pay for the damage
to the downstairs office space.
Hired Auto and Non-owned Auto
Most businesses add an option to their general liability policy called “hired auto
and non-owned auto” insurance. If you don’t have any vehicles in your company’s
name, this option meets the requirements of any contract that requires you to have
commercial auto coverage.
This coverage also allows you to save money on at least part of the insurance that
rental car companies recommend whenever you pick up their cars. When you rent the
car in your company’s name, this insurance applies to the liability part of the
rental car contract. You’ll still need to purchase damage insurance from the car
rental agency if you want to be fully protected, however, as this option doesn’t
cover physical damage to the rented vehicle.
Additionally, if you or an employee is driving a personally owned vehicle on company
business, and you have an auto accident, non-owned auto coverage protects you should
the company be sued. However, the policy will not cover a suit against you or your
employee personally – that would be covered by a personal auto policy.
Legal Defense Expenses
Even if your company is not found liable for a claim, the process of mounting a
defense is expensive without insurance. A business liability insurance policy will
generally pay for:
- The cost to defend or investigate a suit or claim against you, including court costs,
witness fees, attorney's fees, and police report costs
- If the insurance company asks you to assist in your defense against a claim, it
will pay your reasonable expenses, such as the loss of your income for a day in
- It will pay the judgments or settlements resulting from covered suits, including
interest required on the judgment and the injured party’s medical expenses, if your
defense is unsuccessful
- When a court requires you to post a bond to ensure you can pay a potential judgment
in a liability suit, this insurance will pay the premium for the bond
If a person should be injured, either directly by you or at your place of business,
your commercial liability insurance coverage would pay for funeral and medical expenses
incurred within a year of the accident. For example, if one of your clients slips
and falls at your office and requires medical treatment, your policy would cover
the cost of that treatment. Of course, policy limits apply.
Personal injury is the part of the commercial general liability policy that protects
you should someone claim that your business caused damage that isn’t physical. In
the following examples, most liability policies would protect you against any lawsuits
- Publishing, in writing or verbally, false information that libels or slanders an
organization or person
- Publishing material that violates someone’s privacy rights
- Falsely detaining, arresting or imprisoning someone
- Maliciously prosecuting someone
- Evicting someone wrongfully
Should you ever be sued over something that happens while advertising your company's
products or services, your business liability insurance protection will cover the
claim. Advertising injuries can arise from:
- Publishing, verbally or in writing, false information that libels or slanders a
person or organization
- Publishing material that violates an individual’s privacy rights
- Copying another company's style of doing business, or advertising concepts
- Infringing on another business’s title, copyright or slogan
General Liability Insurance & the Business Owner’s Policy (BOP)
For some business owners, general liability insurance can be simplified through
an insurance package known as a business owner’s policy, or BOP. In order to qualify
for a BOP, which offers the kinds of insurance business owners most commonly need
in one pre-packaged policy, a business must meet certain criteria.
To find out whether your business can obtain general liability insurance through
complete this short application. We typically respond by email within 24
hours. (We won’t bother you with a phone call, but feel free to call us at (800)
655-1714 and ask questions!)
Find out more about the general liability insurance a BOP offers.
Compare Commercial General Liability Insurance Costs & Quotes
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