Liability Insurance
What is Liability Insurance?
Liability Insurance is a type of insurance policy that protects individuals or businesses from the risk of being held legally responsible (liable) for injury or damage to third parties (people or property). It covers legal defense costs, settlements, and judgments arising from covered incidents, as per the policy terms.
What Invokes Liability Insurance?
Liability insurance is typically triggered when:
- A third party suffers injury or loss due to the actions or negligence of the insured.
- The insured is legally obligated to compensate for damages
- A claim or lawsuit is filed against the insured within the policy period.
- Events such as slip and fall accidents, defective products, professional errors, or advertising injuries occur.
Commercial General Liability (CGL) Insurance
Commercial General Liability (CGL) Insurance is a comprehensive business insurance policy designed to protect companies from third-party claims of bodily injury, property damage, and personal injury. It covers legal costs, medical expenses, and settlements arising from accidents or negligence on the insured business premises or due to its operations.
What is covered & what is not covered?
Public Liability
protects against third-party claims due to business operations or accidents on premises.
Product Liability
protects against claims arising from harm caused by defective or unsafe products.
This policy is essential for businesses of all sizes—including manufacturers, retailers, contractors, and service providers—as it helps mitigate financial risks associated with lawsuits and liability claims.
Why is Commercial General Liability (CGL) Insurance Essential?
- Legal Protection Against Lawsuits
- Protection from Third-Party Claims
- Business Continuity & Reputation Management
- Contractual & Regulatory Compliance
- Peace of Mind & Financial Security
Important Things You Should Note
- CGL is for Third-Party Claims – It does not cover damage to the insured's own property or employees.
- Different Coverage Options Available – Policies can be tailored to include public liability, product liability, and advertising injury.
- Limits of Coverage Apply – Policies have per-claim limits and aggregate limits, so businesses should assess the right coverage amount.
- Legal Costs Can Be Expensive – Without CGL insurance, businesses may face huge legal fees and settlement costs in case of lawsuits.
- Exclusions Exist – Certain risks like professional errors, pollution liability, and cyber liability require separate insurance policies.
What is Covered & What is Not Covered?
What is Covered?
- Bodily Injury Claims – Covers medical expenses, legal fees, and settlements for third-party injuries on business premises or due to business operations.
- Property Damage Claims – Covers damages caused to third-party property due to business activities.
- Personal & Advertising Injury – Covers claims related to libel, slander, copyright infringement, and misleading advertisements.
- Medical Payments – Pays for medical expenses of injured third parties without needing a lawsuit.
- Legal Defense Costs – Covers attorney fees, court expenses, and settlements for covered claims.
What is Not Covered (Exclusions)?
- Professional Errors – Negligence or errors in professional services require Professional Indemnity Insurance.
- Employee Injuries – Workplace injuries of employees are covered under Workers' Compensation Insurance, not CGL.
- Intentional Damage or Fraud – Willful misconduct, fraud, or intentional harm is not covered.
- Contractual Liabilities – Any liabilities assumed under a contract or agreement are excluded unless covered explicitly.
- Cyber Risks – Data breaches and cyber threats require Cyber Liability Insurance.
Frequently Asked Questions (FAQs)
Who needs CGL insurance?
CGL is essential for businesses of all sizes, including retailers, manufacturers, contractors, event organizers, and service providers.
What is the difference between Public Liability and CGL insurance?
Public Liability Insurance covers only bodily injury and property damage to third parties, while CGL also includes personal injury and advertising liability.
How much CGL coverage does a business need?
Coverage depends on factors like business size, industry risks, contractual requirements, and financial exposure to liability claims.
Does CGL cover product-related claims?
Yes, CGL includes Product Liability Coverage, protecting businesses from claims due to defective products causing harm.
Can CGL insurance cover lawsuits from employees?
No, employee-related claims like wrongful termination, discrimination, or harassment require Employment Practices Liability Insurance (EPLI).
