Nearly every business faces the risk of being sued for injuries it causes, which is why your business should start with a general liability policy.
The best way to effectively protect the assets of your business is to carry adequate Commercial General Liability (CGL) insurance coverage. CGL protects your business from damages caused by bodily injury or property damage for which your business is found to be legally liable.
Perhaps your business also needs an auto policy and even several other liability insurance policies.
Tip. Make sure you use an experienced commercial insurance agent when reviewing your different liability exposures. Without the proper protection, you're risking your business and possibly your personal assets.
The Commercial General Liability Policy (CGL) is written on two distinctly different forms. Depending on your type of business, you might only have one option so it's important to understand the difference between the two.
Two CGLs are available:
- An Occurrence policy. (the most common) A claim is paid if it happens during the policy period.
- A Claims Made policy. A claim is paid if made during the policy year, and the claim had to occur on or after the retroactive date.
This can create problems when you switch between the two types of forms.
What Does CGL Cover?
A typical CGL policy provides coverage for claims of bodily injury or other physical injury, personal injury (libel or slander), advertising injury and property damage as a result of your products, premises or operations.
As a safeguard against liability, CGL enables you to continue your normal operations while dealing with real or fraudulent claims of negligence or wrongdoing. CGL policies also provide coverage for the cost to defend and settle claims.
Here's more detail into what a typical CGL policy may cover:
- Automatic additional insured: Coverage is provided for written contracts, agreements and permits.
- Personal and advertising injury: Protects against offenses made by you or your staff during the course of business, such as libel, slander, disparagement or copyright infringement in advertisements.
- Defense costs: Provides coverage for legal expenses for liability claims brought against your business, regardless of who is at fault.
- Medical expenses: Provides coverage for medical expenses if someone is injured on your premises or by your products.
- Premises and operations liability: Provides coverage for bodily injury and property damage sustained by others on your premises or in conjunction with your business operations.
- Products liability: Provides coverage for bodily injury and property damage sustained by others as a result of your products.
How Much Coverage Does Your Business Need?
The amount of coverage that your business needs depends on three factors:
- perceived risk
- where you operate your business, and
- the type of products you manufacture.
Perceived risk: Consider the amount of risk associated with your business operations and functions. For instance, if you manufacture heavy machinery, you would generally need more coverage as compared to another organization that manufactures stuffed animals.
Premises and operations liability: If you operate in a state that has a reputation for rewarding high damages, then you may wish to purchase higher limits of liability.
Type of product manufactured: If you manufacture a dangerous product, you may want to carry higher limits of liability.
Remember, you can purchase an Umbrella Liability policy to help achieve the desired limit of liability if you feel the coverage provided by the CGL does not adequately protect your business.
And as an added bonus, Umbrella policies often provide additional liability protection over the other policies your business needs such as Commercial Auto, Employee Benefits Liability and Employers Liability coverage.
Read further article : What type of coverage is provided in my Commercial General Liability Policy?
Other Ways to Protect Your Business, In Addition to CGL
Here are some other tips for protecting your business:
- Establish a high standard for product quality control at your organization
- Keep all company records up to date and accurate
- Train your employees thoroughly and properly
- Ask us for safety and compliance information
We understand that your business needs to be protected, and we’re here to help. Please contact us today to learn more about our risk management and insurance solutions, or if you're ready to get started, you can Request a Proposal.