Most business owners are aware that they need general liability coverage, but few know specifically what that means. And often, leases will require “public liability” at term which implies the lease author is not particularly well-versed in current insurance terms. What follows is a primer on what is currently known as Commercial General Liability, or CGL.
The most important thing to understand about a CGL policy is that it is designed to cover bodily injury and property damage to others, as well as personal injury, such as libel or slander. It does not cover injuries to employees (which are handled by the workers compensation policy), or financial losses due to faulty work (which is handled by the professional liability or errors & omissions policy). However, any business activity which results in a person or persons getting hurt, or some type of property being damaged, is addressed by the CGL.
The CGL insurance policy is made up of six different coverage limits expressed on a line-by-line basis on the declaration page of the policy. The first limit shown is called the general aggregate, which represents the most a policy will pay during the annual policy period, regardless of the number of claims. The next limit shown is typically the products/completed operations aggregate limit, which indicates the most the policy will pay for claims involving injury or damage as a result of the business’ products (such as food poisoning for a restaurant) or completed operations (such as a completed stairwell collapsing for a carpenter). There is then a limit for personal/advertising injury, the overall per occurrence limit, and the fire damage limit, which covers legal liability for damage to the building when leased by the business. Finally, the medical expense limit covers medical services for visitors to the premises.
