What is commercial general liability (CGL) insurance?
Commercial General Liability insurance is a type of insurance intended to protect businesses from losses when it's found accountable in inflicting physical injuries or damage in properties to any third-party individual or entity.
It might be caused by the products you're selling or the services that you provide. This type of insurance can also protect you when your staff or yourself conducts some business offsite.
A policy of this type can help alleviate your business's loss whenever it is found responsible for any third-party either within or outside your business' premises. For instance, let's say a customer is heading to your retail store, and they slipped and fell. They can file a lawsuit or a claim against your business for the injury they have sustained. Trips and falls are sending more Canadians to the emergency room more than ever before, according to the Canadian Institute for Health Information.
Protection from this kind of liability is essential. Hence, commercial general liability insurance can be a great help. Since there has been a bodily injury on the potential customer, it is assumed that there happened to be some negligence, though it does not necessarily mean that the same has to come directly from your end. Even if someone is accountable for the injury they have acquired on your premises, they could still file a claim toward you or your business. Let's say there's nothing wrong with the steps leading to your store, but a customer tripped, you may still face legal proceedings.
Bodily injuries resulting from accidents can occur to anyone who happens to be physically present within your business' premises, including:
- Maintenance staffs
- Delivery people
- Any other type of visitor
Liability claims on a bodily injury can result in substantial financial expenses related to the following:
- Hospital bills
- Lost wages
Property damage liability:
Another liability that can be covered by commercial general liability insurance is property damage liability. It is a severe concern for small businesses because if you're found legally accountable for damages inflicted on a third-party individual or entity, you could face costly legal charges. It can also hurt your reputation with the clients that you serve. Commercial general liability insurance, in this regard, offers protection that can mitigate the fees you'll face should your business caused property damage to another individual or entity either on or off your premises. Say, for example, you own an automotive body shop, and one of your supposed customers claims that their car was damaged while it was in your possession. You could face a property liability claim. Here's another example. You have a catering business, and you're catering an event offsite. Should someone claim that you or one of your staff has damaged any of their property during the event, they can file a liability lawsuit against you. Incidents related to property damage may also be grouped with other kinds of liability concerns all in one claim. More often than not, product and property liability claims go hand in hand when the damage resulted from a faulty product. The issue isn't about how small your business is. Whatever the business size, it's still exposed to different forms of liability.
Do I need Commercial General Liability insurance?
Do I need Commercial General Liability insurance? It is a frequently asked question. Some start-ups or small business owners don't know or aren't convinced yet that they need liability insurance. They think it's way too expensive.
But the truth is, no matter what the business size is, even if it's just run from the luxury of your own home, it's still at risk for some forms of liability. In reality, the smaller your business is, the more detrimental the implications of a liability claim can be for you.
At the very least, every business should possess a standard commercial general liability insurance policy that will serve as protection from risks and losses. Here are some of the consequences of leaving out commercial general liability insurance in your business:
- Take for example. You're faced with a lawsuit because you've been found legally liable for bodily injuries or property damages to any third-party individual or entity. Your company may be required to pay for charges that are associated with the legal proceedings. It could further incur financial losses.
- Your most valued reputation with your customers might be severely hurt and, worse, damaged. Naturally, customers need to feel a sense of trust with your business, your products and services. A claim against your company could destroy that trust if handled unsuccessfully. In this situation, commercial general liability insurance is a way to go!
- You might be exposed to various conditions where you might be asked to provide proof of insurance. Tradeshows, business expos of your industry may take place sometimes, and the venue will often require that participants submit a certificate of liability coverage. If you are a contractor and a skilled businessperson, some of your clients may require proof of insurance before dealing business with you or letting you conduct business on their property.
Other coverage options to consider:
Product liability insurance: Product liability insurance is usually incorporated in a commercial general liability insurance policy, but not all the time. It's always vital to ratify that your small business insurance policy can protect you from risks that are sometimes associated with product liability claims.
Cyber risk and data breach coverage. Cyber-attacks have recently posed problems to small businesses and have continued to soar lately. To help protect small businesses that rely on technology to operate from expenses associated with a cyber hack, cyber event expense coverage can be an excellent remedy.
Professional Liability: If you offer professional consultancy services, and one of your clients claimed that your advice had caused them monetary loss, your professional liability coverage can be a tremendous help. It can help cover expenses that you may incur. It is also known as errors and omissions (E&O) coverage. It also forms part of the commercial general liability insurance.
Property insurance: Small business owners naturally rely on property, equipment, tools and technology to keep their businesses operating. If one of those critical components was damaged and would undergo repairs, your business might not be able to continue its operations. In this situation, you might need property insurance coverage.
Equipment breakdown insurance: External sources of damage such as floods, bad weather and fire may affect the entirety of your business, but the effects of those damages are covered in your property insurance policy. However, damages from within your business, such as electrical or mechanical failures, may not be covered. In situations like these, you might need your equipment breakdown insurance, which can be incorporated into your commercial general liability insurance.
Commercial auto insurance: You already have your personal auto insurance policy, but there are times when you or your employees utilize your private vehicle for business or commercial purposes. In this case, you may need commercial auto insurance to protect that vehicle in ways that are beyond the scope of your personal auto insurance policy.