What is Commercial General Liability Insurance and Why Do I Need It?

CGL policies cover a wide range of events, which makes them one of the most important types of insurance that businesses can invest in. Specifically, there are three types of coverages included in CGL policies:
 

1. Bodily injury and property damage

CGL covers situations where someone who does not work for your company is injured because of your business operations, your services or your employees. It also covers events where someone else’s property is damaged because of your company or workers unintentional acts.

This type of insurance also applies to damages done to property that was rented to you, such as equipment or property. However, CGL is typically applied only to such instances caused by fire.

These types of events can unfold in many ways, such as a client tripping and falling on the jobsite, or an employee damaging a client’s personal property.

When these types of situations occur, there’s a chance the injured person will sue your business.  Defense costs and other legal fees can be catastrophic to a business, but CGL can help cover those to protect you and your business.
 

2. Personal and advertising injury

Personal injury is damage to a person that is not physical, bodily harm. This includes:

• Reputational damage, such as through libel or slander.
• False arrest or wrongful eviction.
• Malicious prosecution.
• Wrongful entry or invasion or property.

Advertising injury is related to the inappropriate use of advertising in relation to the business’s products or services. This includes:

• Copyright infringement.
• Use of another’s advertising idea.
• Slander or libel against another company.

Reputational harm lawsuits aren’t the most common insurance claim, but they are typically the most expensive, with an average cost of $50,000, according to Insurance Journal. Having a CGL policy in place in the event of a lawsuit due to personal or advertising injury can save a company from serious losses due to legal costs.
 

3. Medical payments

If someone, other than you or your employees, is injured on your jobsite, property or because of unintentional acts by your business or employees, they may need medical treatment. CGL helps cover medical costs.

There are many types of medical expenses that can occur following an injury, though CGL may not always cover all of them. As necessary and within reason, this type of insurance policy can cover:

• Medical expenses.
• Ambulatory services.
• Surgical expenses.
• Hospital stays.
• Nursing expenses.
• Funeral costs.

An important note: CGL does not require the injured party to file a lawsuit for the policy to cover their medical payments. Avoiding a legal process can allow the policy to promptly provide compensation for medical payments.