Remember when a customer sued a fast-food chain, claiming she was served an excessively hot drink, leading to severe burns? The lawsuit claimed that the beverage was heated to a dangerously high temperature, which was significantly hotter than what would be considered safe or standard. This case brought widespread media attention and sparked debates on product safety standards and corporate responsibility. This case serves as a reminder that even small operational details, such as a beverage’s temperature, can result in major legal issues. That’s why having Commercial General Liability (CGL) insurance is crucial for business owners.
What does Commercial General Liability insurance cover?
Commercial General Liability insurance is a comprehensive insurance policy designed to protect businesses from a wide range of liabilities.
Bodily injury
Commercial General Liability insurance provides crucial coverage for physical injuries that occur on business premises. This protection can extend beyond customers, encompassing incidents involving non-customers like delivery personnel. For instance, if a delivery person trips over an uneven step and is injured, this policy could cover the medical costs and any legal claims arising from the incident beyond typical customer interactions.
Property damage
This aspect of Commercial General Liability insurance covers damages your business might cause to someone else’s property. This is particularly important if your business operates in rented properties, like conference rooms or event venues. For example, if your company is hosting an event and accidentally damages high-tech equipment in the rented venue, this insurance could cover the costs of repair or replacement.
Personal injury
This coverage is critical in an era where a single comment can have far-reaching consequences. CGL insurance helps protect against claims of reputational harm, such as defamatory statements made by the business or its employees, including on social media platforms. An example could be a situation where an employee’s defamatory social media post about a competitor leads to a legal claim. This is particularly relevant for businesses whose employees are active on social media, where the lines between personal and professional commentary can blur.
Advertising injury
In the realm of advertising and marketing, errors can lead to significant legal challenges. Commercial General Liability insurance covers advertising-related liabilities.
In today’s digital landscape, the increasing risk of intellectual property infringement has become a pressing concern for businesses. CGL insurance can cover claims arising from unauthorized use of copyrighted materials, which is especially pertinent for online content. For instance, if your business’ blog uses copyrighted image or trademark without authorization, this policy could protect against legal actions taken by the copyright or trademark holder. This coverage is essential for businesses regularly producing online content, where the risk of inadvertent copyright infringement is higher.
Who needs this insurance?
Commercial General Liability insurance is a critical safeguard for a wide range of businesses. It provides essential protection against common risks that can arise from everyday operations. Here are some specific situations where your business could greatly benefit from having Commercial General Liability insurance, ranging from customer interactions to fulfilling contract requirements:
Businesses open to the public
Businesses that invite the public, clients, or vendors on premises, are susceptible to accidents like slips and falls. Commercial General Liability insurance protects against claims of bodily injury or property damage occurring on your premises. This insurance can also be a critical asset in situations such as an item falling and injuring a customer, a business activity causing harm like noise-induced hearing loss, or even accidental food poisoning at a company event. These are physical risks that might not immediately come to mind but can result in significant legal and financial consequences. In the event of a loss, the insured is sued. They will incur legal expenses and the CGL will defend the insured provided the loss is covered.
Businesses operating in third-party locations
If your business operates in third-party locations, like event venues or client sites, there’s a risk of causing property damage. Commercial General Liability insurance covers damages or injuries that occur in these off-site locations. This insurance can cover damages caused by vibrations or sound from your equipment affecting nearby properties or environmental damage like spills during outdoor events. It also safeguards you if your business activities unintentionally disrupt the operations of other businesses at shared venues, leading to claims of indirect damage. These nuanced risks highlight the importance of commercial general liability insurance coverage for businesses operating in various locations, ensuring protection against a spectrum of potential incidents.
Businesses with contractual requirements
Many clients require businesses to have Commercial General Liability insurance as part of their contract terms. Before finalizing business contracts, clients often ask service providers, particularly those in high-risk sectors like construction, consulting, and manufacturing, to have general liability insurance. This requirement is a precaution to ensure the provider can cover liabilities, such as accidents in construction, reputational issues in consulting, or product quality in manufacturing. This way, clients can be confident that their partners are prepared to handle unforeseen risks. Without it, you can lose contracts to competitors, ultimately affecting your business growth and reputation in the industry.
Businesses with temporary employees
Temporary employees can pose the same risks as permanent staff, such as accidental property damage or causing injury to others. Commercial General Liability insurance covers incidents involving all employees, regardless of their employment status, ensuring that your business is protected.
How much coverage does your business need?
The amount of Commercial General Liability insurance coverage your business needs depends on several factors, such as the nature of your business, its size, and the level of risk it faces. Businesses in industries with higher risks, like construction and manufacturing, may require more coverage compared to a small retail store. It’s also important to consider your business’ assets, potential legal costs, and the contractual requirements you may face. These policies typically have ‘per occurrence’ and ‘aggregate’ limits. The ‘per occurrence’ limit is the maximum amount the insurer will pay for any one incident. This means that regardless of the number of incidents, the insurance company won’t pay more than the aggregate limit in a policy term. Please consult with your Federated insurance agent when determining the limits and coverages.
Protect your business with CGL insurance
Unexpected incidents can disrupt even the most well-prepared businesses that might derail your success. Take proactive steps to secure peace of mind and ensure your company is safeguarded with a comprehensive insurance coverage. To learn more, visit our Commercial General Liability insurance page today!
This blog is provided for information only and is not a substitute for professional advice. We make no representations or warranties regarding the accuracy or completeness of the information and will not be responsible for any loss arising out of reliance on the information. Terms, conditions and exclusions apply to coverage. See policy for details.
