A Commercial General Liability insurance policy is one of the most important policies to be considered for all businesses. There are potential threats of an accident to a customer, ven-dor, or any third-party involved with your business. Even a simple slip and fall in the premises can be devastating resulting in a potential lawsuit.
The Commercial General Liability Insurance policy will provide necessary financial support to businesses against any legal liabilities due to a bodily injury or property damage that can oc-cur as a result of your business operations.
Coverage
Commercial General Liability insurance is a combination policy covering both public and product liabilities under one single policy form.
- Covers for legal liability to pay damages because of bodily injury or property damages with no limitations for cover in terms of premises- owned/rented or at premises/out-of premises.
- Coverage includes all bodily injury and property damage arising out of products of the busi-nesses. Product Liability Insurance will cover for cost of compensation against financial losses suffered by a third-party arising out of use or consumption of a faulty product. The third-party has to suffer a bodily injury or property damage.
- Any damages because of personal and advertising injury caused by an offence arising out of business.
Critical Features of the CGL policy
Third-Party Injury Protection May Cover
- Non-employee injuries that happen on your property.
- Immediate medical expenses for the injured person.
- Legal costs when you're sued over the incident.
- Lawyers' fees.
- Court expenses.
- Settlements, and Judgments, if the case goes to trial and you're found liable for wrong-doing.
Third-Party Injury Protection May Cover
- Repair costs for damaged property.
- Replacements for lost or destroyed property.
Product Liability Protection May Cover
- Damage caused by the products you make, distribute, or sell.
- Legal costs when you're sued over the incident.
Advertising Injury Protection May Cover
- Invasion of privacy, such as using someone's image or words without their consent.
- Libel or slander.
- Copyright or trademark infringement.
- Legal costs when you're sued over these incidents.
Definitions:
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Bodily injury – Includes death and illness, disability, shock, anguish or mental injury.
- Property damage – Any destruction of tangible product including loss of use.
Who can buy the Commercial General Liability insurance?
- Small businesses
- Contractor
- Manufacturers.
- Distributors
- Wholesalers and retailers.
The product that is insured can be the final product or just a part of the final product. Hence, all businesses involved in either manufacturing or distribution of a tangible product should consider buying this insurance policy.
What is paid under Commercial General Liability insurance?
Commercial General Liability insurance provides cover for payments, medical expenses and damages including:
- Legal liability expenses including claimant’s costs, fees and Defense costs.
- Damage costs – monetary sums pursuant to judgments or awards and settlements.
All the above expenses and costs are paid for third-party claims arising out of bodily injury or property damage.
What is NOT Paid under this insurance?
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Any liability for fines, penalties or punitive damages.
- Product Guarantee.
- Recall of any product (unless purchased as an extension).
- Repair or modification or replacement of product or any part of the product.
- Wilful, deliberate non-compliance with any statutory provisions.
- Copyrights, patents or trademarks infringement.
- Radioactive toxic explosives or other hazardous materials.
- Claim made prior to policy inception or retroactive date (if any).
- War risk and Terrorism.
How the limits under Commercial General Liability insurance work?
- Coverage will be restricted by policy terms and conditions, and limited within a certain maximum limit of coverage per event or occurrence (AOA)
- The limit varies depending on the company’s revenues, business, and exposure type.
- The policy limit is an “annual aggregate” (AOY) meaning that there is only one single limit for all the claims during one policy year.
- Defense and other costs are part of this single limit