What Damages Are Covered By A CGL Policy?

October 07, 2020

A Commercial General Liability (CGL) insurance policy offers protection against a wide variety of risks. Its broad protections make it the foundation of almost every commercial risk management plan and the reason we recommend this policy to every company or organization.

The courts have even used this liability policy as a test to determine whether a company is legitimate.

But exactly what damages are covered by a CGL policy? In the video below, we explain the three coverage parts: bodily injury and property damage, personal and advertising injury liability, and medical payments:

Once you know the three coverage parts, it’s then important to understand the damages covered by a CGL policy:

1) Property Damage

Property damage is one of the core coverages of the CGL policy: Your policy protects against instances where you damage the property of someone else (or another company).

For example, let’s say you were hired to paint a bathroom and during the painting process, you stood on a countertop that could not support your weight and caused damage. That damaged countertop would be covered under a CGL policy.

2) Bodily Injury

In the same coverage part as property damage, the CGL policy also covers bodily injury that you cause others.

Using the same example from above, if you impacted someone while falling from the countertop and it resulted in an injury, that would be a covered CGL claim.

3) Copyright Infringement

While you are running your business, it is hard to keep up with copyright regulations for logos, slogans, and other related intellectual properties. You might have a copyright license and get accused of infringement, OR your permission to use the content might have expired.

Regardless, a CGL policy covers accidental misuse of copyrighted material (as long as you aren't in the field of advertising).

4) Legal Expenses

The U.S. legal system gives anyone the right to sue you, and you have the right to defend yourself. The goal is to create an even playing field in the pursuit of justice—you can be financially compensated if a person or company harms you, or be exonerated if they’re making a false claim. But defending yourself in court, or simply paying for lawyer fees, isn't cheap.

Depending on the type of accusation, it could take tens (or even hundreds) of thousands of dollars to prove you did not harm someone.

As long as the accusation is covered under Commercial General Liability, most policies will pay for unlimited defense costs and do not count toward your total insurance limit.

5) Products Liability

According to the Insurance Information Institute, the most costly lawsuit you could ever be involved in is a products liability lawsuit. Shockingly, the average product liability lawsuit judgment is $7,000,000+.

CGL coverage protects your business if, after selling a product you made, the product injured someone or harmed someone's property—even if they signed a waiver. Check out our previous article, "3 Defective Product Examples Your Business Can Learn From" for more examples of product liability lawsuits.

If you make or sell a physical product, this is a must-have insurance coverage and is included on almost every CGL policy.

Summary

CGL insurance covers a lot of damages and risks under a single policy, which is why every company should have it. Not only does it cover most liability risks that businesses face, but it pays for your legal team if you’re named in a lawsuit.

Often, if you own any property, we see this policy bundled with a commercial package policy (CPP) or a business owners policy (BOP).

If you need help understanding how a CGL insurance policy could benefit you, want an expert to review your policy, or are looking for options to protect your business, schedule a free meeting with one of our experts.

About The Author: Austin Landes, CIC

Austin is an experienced Commercial Risk Advisor specializing in property & casualty risk management for religious institutions, real estate, construction, and manufacturing.

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