It’s important to know that the Commercial General Liability (CGL) policy is a legal contract and as such, there are many important terms used throughout that document for which it’s helpful to know the definition.
Take for example the term “occurrence.” Seems simple and straightforward enough, right? Well, the fact is, a ot of time and effort has been spent deciding what incidents liability policies would routinely cover.
The old word was Accident, but it was too narrow and implied only sudden incidents. Today the word occurrence is commonly found in liability policies. The CGL reads:
"Occurrence means an accident, including continuous or repeated exposure to substantially the same general harmful conditions."
Insured contract. CGL does offer some coverage for a few contractual liabilities. These agreements include:
- easement or license
- elevator maintenance.
Example. Let's say a railroad contracts to run a track along your warehouse property. Plus, the railroad holds you responsible for injury or damage from the sidetrack. That's a sidetrack agreement.
Impaired property. This is tangible property that can be restored.
Example. Some of your work is incorporated into another's work or product. It causes that work or product to be impaired. Under CGL, you have coverage. That coverage is not for your work, but for correcting the impaired property.
Here’s another important term in the CGL policy: Your Work, which essentially means work or operations performed by you or on your behalf. Why is this important? Mostly because the CGL policy excludes coverage for your work… insurance companies aren’t in the business of providing a warranty on the workmanship of their insured’s.
Realize liability insurance does not correct your poor workmanship; it just compensates others for your negligence.
We’ve only scratched the surface on the terms in the Commercial General Liability policy. In fact, the standard policy has 22 terms defined which have a major impact on how the policy responds to certain types of claims.
If you’d like to learn more, contact one of our Licensed Advisors or complete the form above. We’re here to help.
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