COMMERCIAL GENERAL LIABILITY INSURANCE POLICY - DEFINITION, COVERAGE, BENEFITS AND CLAIMS PROCESS

GET A FREE QUOTE On Commercial General Liability Insurance

WE CARE - we have strived to see the world through our clients' eyes. We are simply there for you - through good times and bad.

Contents

  1. Commercial General Liability Insurance Policy - Definition, Coverage, Benefits and Claims Process
  2. Secure your Business from Claims of Bodily Injuries and Property Damage
  3. What is a Commercial General Liability Insurance Policy?
  4. What does a Commercial General Liability Insurance Policy Cover?
  5. What are the types of Commercial General Liability Insurance Policy?
  6. What does Bodily Injury and Property Damage Section of a Commercial General Liability Insurance Policy Cover?
  7. What is Personal and Advertising Injury Liability under a Commercial General Liability Insurance Policy?
  8. What are the Coverages under the Personal and Advertising Injury Liability section of a Commercial General Liability Policy?
  9. What does the Medical Payments Section of a Commercial General Liability Insurance Cover?
  10. Key Components of a Commercial General Liability Insurance Policy
  11. What are the various limits of liability in a Commercial General Liability Insurance Policy?
  12. 12. General Aggregate Limit
  13. 13. Premises and Operations Limit:
  14. Products and Completed Operations Limit:
  15. Personal and Advertising Injury Limit:
  16. What are the Add-On Covers under a Commercial General Liability Insurance Policy?
  17. What are the Benefits of a Comprehensive General Liability Insurance Policy?
  18. Examples of Claims covered by a Commercial General Liability Insurance Policy
  19. Slip and Fall Accidents
  20. Product Liability Claims
  21. Advertising Injury Claims
  22. Who needs to purchase a Comprehensive General Liability Insurance Policy?
  23. What is the Claims Process for a Commercial General Liability Insurance Policy?
  24. How much does a Commercial General Liability Insurance Cost?
  25. What is not covered under a Commercial General Liability Insurance Policy?
  26. Will my Commercial General Liability Insurance Policy Cost be higher if I purchase the Policy through an Insurance Broker?
  27. Get a FREE 1 Hour Consultation for your Commercial General Liability Insurance Policy
  28. FAQS
  29. Testimonials

What is Commercial General Liability Insurance Policy Definition, Coverage, Benefits and Claims Process?

Secure your Business from Claims of Bodily Injuries and Property Damage

A Commercial General Liability Insurance Policy is one of the most important types of Insurance and a must have Insurance Policy for a Business. In today's times of increasing litigation, Businesses are at a greater risk of getting sued by Third Parties like their Customers for any Bodily Injury or Property Damage they might suffer.

Companies have been sued for small incidents like a Customer slipping and getting injured within the Business Premises or on account of Company's Advertisements containing Misleading Information. Though these incidents are small, an adverse ruling by the Court has resulted in the Company having to pay substantial money towards defending such claims in courts and also towards compensatory damages.

With increasing litigation, such cases are only likely to increase in future. Hence, every Business should purchase a Commercial General Liability Insurance to protect itself from such Claims. A Commercial General Liability Insurance Policy (also known as a CGL Insurance Policy) protects the Insured from claims of Bodily Injury or Property Damage and Personal and Advertising Injury.

Commercial General Liability Insurance Policy - Definition, Coverage, Benefits and Claims Process

What is a Commercial General Liability Insurance Policy?

A Commercial General Liability Insurance (also known as CGL Insurance Policy) is a type of an Insurance Policy which reimburses the Insured Person for the Legal Expenses and Compensatory Damages that the Insured becomes legally liable to pay on account of the Bodily Injury or Property Damage suffered by a Third Party by a Company's Operations, Products or Injuries that occur within the Insured Person's Business Premises. A CGL Policy is a combination of a Public Liability and a Product Liability Insurance Policy. A Commercial General Liability Insurance Policy is also known as Comprehensive General Liability Insurance Policy.

Bodily Injury under a Commercial General Liability Insurance Policy is defined as bodily injury, sickness or disease sustained by a person, including death. It is important to read the Commercial General Liability Insurance Policy Wording to ascertain the exact definition of Bodily Injury.

Property Damage under a Commercial General Liability Insurance Policy means

a) Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it, or

b) Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the “occurrence” that caused it.

Property Damage under a CGL Policy specifically covers only tangible property and does not include any damage to electronic data.

What does a Commercial General Liability Insurance Policy Cover?

A Commercial General Liability Policy normally covers Defense costs and Compensatory Damages occurring on account of the following:

  1. Coverage A: Bodily Injury and Property Damage - Bodily Injury and Property Damage Section of a CGL Insurance Policy provides coverage for Bodily Injury caused to other people or damage caused to a Third-Party Property. Bodily Injury or Property Damage can happen on the Insured's Business Premises or on account of Insured's Business Operations or even because of use of the Insured's Products
  2. Coverage B: Personal and Advertising Injury Liability - Section B of a CGL Policy provides coverage for Personal and Advertising Injury Liability which includes cover for claims of Libel, Slander, False Arrests, Malicious Prosecution, Copyright Infringement etc. You can read our detailed Blog post on Personal and Advertising Injury in a CGL Policy to learn more.
  3. Coverage C: Medical Payments - The Medical Payments Section of a CGL Policy pays for the medical bills of bodily injury suffered by third parties on the Insured's Premises or as a result of Insured's Business Operations or Products. The Medical Payments are made regardless of the Insured's fault or negligence.

What are the types of Commercial General Liability Insurance Policy?

There are 2 types of Commercial General Liability Insurance Policies available in India:

Claims Made Policy: A Claims Made CGL Policy requires that the Covered Incident happens within the Policy Period and the Notification of the Incident also has to happen within the Policy Period. As long as the Covered Incident happens after the Policy's Retroactive Date, the Insurance Company has to provide coverage.

Consider an example where a Company has a CGL Policy with a Policy Period of 1st Jan 2019 to 31 December 2019. A customer of the company suffers a bodily injury because of a defective product on 1st March 2019 and a claim was reported on 10th March 2019. This means that the Incident happened within the Policy Period and the Notification of the claim also happened within the Policy Period. This is a Covered Claim under the Comprehensive General Liability Insurance Policy. Now, if the injured individual reported the incident 1 year later on 10 March 2020, the claim would be covered only if the company had continued its CGL Policy Coverage by renewing its Policy and if the Company had opted for a Retroactive Date Cover.

This means that the Insured Company has to renew its CGL Policy with a Retroactive Date Cover to keep its coverage active under the Policy.

Occurrence Based Policy: An Occurrence Based Policy provides coverage if the Covered incident happens within the Policy Period regardless of when the Claim was filed. This means that an Occurrence Based Policy will provide coverage even if the Claim was filed after Policy Expiry as long as the Covered Incident happened within the Policy Period. An Occurrence Based Policy is more expensive than a Claims Made CGL Policy.

Consider an example of a Company which has an Occurrence Based CGL Policy with a Policy Period of 1st Jan 2019 to 31 December 2019. A customer of the company suffers a bodily injury because of a defective product on 1st March 2019 and a claim was reported on 10th March 2022. An Occurrence Based Policy will provide coverage since the Incident happened within the Policy Period.

What does Bodily Injury and Property Damage Section of a Commercial General Liability Insurance Policy Cover?

The Bodily Injury and Property Damage Section of a Commercial General Liability Insurance covers the Defense Costs and Compensatory Damages that the insured Person or the Insured Company becomes legally liable to pay on account of the Bodily Injury or Property Damage suffered by third parties.

Bodily Injury means any injury, sickness or disease sustained by a person while Property Damage implies any physical injury to tangible property resulting in its loss of use.

Several businesses have multiple risk exposures from their clients and customers suffering from Bodily Injury and Property Damage. Consider the case of this guest who died in the swimming pool of a hotel. The hotel was liable for the liable for damages on account of the death of guest. Businesses have numerous such exposures to bodily injury and property damage which make them potentially liable.

The Bodily Injury and Property Damage Section of a CGL Insurance Policy covers the following risk exposures:

  • Premises Liability - The Bodily Injury and Property Damage Section of a CGL Insurance Policy pays for Third Party Claims for Bodily Injury or Property Damage that occurs on the Company Premises on account of business operations.
  • Products Liability - This Section of the Commercial General Liability Insurance Policy will respond if the Company is sued for Bodily Injury or Property Damage suffered when a Consumer uses the Company's Products.
  • Completed Operations Liability - The Bodily Injury and Property Damage Section of a CGL Insurance Policy also provides cover for Products-Completed Operations. This means that the CGL Policy covers liability arising out of Bodily Injury or Property Damage occurring away from premises owned or rented by the Insured and arising out of Insured's product or Insured's work (other than products) that a Company has finished and/or has been accepted and put to its intended use by the Customer. You can read our detailed blogpost on Product-Completed Operations Coverage in a CGL Insurance Policy to know more.

What is Personal and Advertising Injury Liability under a Commercial General Liability Insurance Policy?

The Personal and Advertising Injury Liability Section of the CGL Insurance Policy pays for the Defense Costs and Damages that the Insured Party becomes legally liable to pay on account of Personal and Advertising Injury caused in the course of advertising Products or Services.

For example, if a Company publishes an Advertisement that disparages your Competitor's Products, this may result in the Competitor losing customers which results in Loss of Revenues and Profits.

Consider this famous case of HUL suing Amul over the latter's Advertisements relating to HUL's Ice-Creams where Amul disparaged HUL's products. This is a good example of Advertising Injury.

Personal Injury implies Injuries arising out of offenses other than Advertising.

What are the Coverages under the Personal and Advertising Injury Liability section of a Commercial General Liability Policy?

The Coverages under the Personal and Advertising Injury Liability Section of the Commercial General Liability Policy are as follows:

  • Invasion of Right to Privacy
  • Slogan or Copyright Infringement in the Insured's Advertisements
  • Libel, Slander
  • Using someone else's idea in the Insured's Advertisements
  • False Arrests, Detention or Imprisonment
  • Malicious Prosecution

What does the Medical Payments Section of a Commercial General Liability Insurance Cover?

The Medical Payments Section of a CGL Insurance Policy pays the Medical Expenses for a Bodily Injury caused by an Accident on the Insured's Premises or because of Insured's Operations. This is a No Fault Liability Cover and covers emergency medical expenses to Third Parties who suffer a Bodily Injury or Property Damage within the Insured's Premises. This is called a No Fault Liability Cover as this section does not require the Third Party who has suffered Bodily Injury to make a Claim against the Insured. However, the Insured Party will directly notify a Claim to the Insurance Company. The Insurance Company will pay the Claim under this section (without the requirement of a Legal Notice). This Section does not have any deducible.

Also, note that this Section will not cover the complete medical expenses for the Insured Party but it will pay only the Emergency First Aid Expenses which the Insured had to incur on account of the Third Party's Injury in order to mitigate loss which might arise due to the Injury.

Key Components of a Commercial General Liability Insurance Policy

The Key Components of a Commercial General Liability Insurance Policy are as follows:

  1. Limits of Liability: Limit of Liability in a Commercial General Liability Insurance defines the maximum amount that the Insurance Company would pay in case of a Claim. Companies should choose their limits of liability prudently so that their risk exposures are adequately covered.
  2. Deductible: Deductible in a CGL Insurance Policy is the amount that the Insured must pay out of his own pocket before an Insurance Company starts paying out the loss.
  3. Terms and Conditions: It is important to thoroughly read through the Terms and Conditions of the Policy by going through the Commercial General Liability Insurance Policy Wordings in detail. The exclusions should be carefully read to avoid any gaps in coverage in case of a claim.

What are the various limits of liability in a Commercial General Liability Insurance Policy?

A Commercial General Liability Insurance Policy specifies different types of limits of liability and it is important to understand these:

General Aggregate Limit

General Aggregate Limit in a CGL Policy is the maximum amount that the Insurance Company will pay in case of a CGL Claim.

Premises and Operations Limit:

Premises and Operations Limit in a CGL Policy specifies the amount that the Insurance Company will pay in case of a claim alleging Bodily Injury or Property Damage within the Insured's Business Premises or because of the Insured's Operations.

Products and Completed Operations Limit:

Products and Completed Operations Limit in a CGL Policy specifies the amount that the Insurance Company will pay in case of a claim alleging Bodily Injury or Property Damage because of using the Insured's Products or because of the Insured's Faulty Work.

Personal and Advertising Injury Limit:

Personal and Advertising Injury Limit in a CGL Policy specifies the amount that the Insurance Company will pay in case of a claim alleging Personal Injury or Advertising Injury such as Libel, Slander, Breach of Privacy etc.

What are the Add-On Covers under a Commercial General Liability Insurance Policy?

Some common Add-On Covers under a Commercial General Liability Policy are as follows:

  1. Act of God Perils – This Extension Covers liability arising out of a natural catastrophe affecting the Insured Premises resulting in Bodily Injury and Property Damage of the Third Party
  2. Food and Beverages Extension - The Food and Beverages Add-On Cover covers the legal liability arising out of injury/death of the third party which happens on account of consuming food or beverages on the Insured's premises or after consuming such food products which are sold on the Insured's premises
  3. Swimming Pool, Beauty Clinic, Gyms Extension (and other similar facilities) under Commercial General Liability Policies covers legal liability arising out of bodily injury and property damage because of using the facilities inside the insured premises
  4. Care, Custody and Control: This extension covers liability arising out of bodily injury and property damage to third party goods which are handed over to the Insured Party for their custody and control.
  5. Valet Parking Liability: This extension covers the liability arising out of damage to the vehicle when the valet parking personnel is driving it and parking it somewhere.
  6. 72 Hours Sudden and Accidental Pollution Coverage: The CGL Policy covers sudden and accidental pollution which occurs within 72 hours and has caused damage. That is certainly an accident. Note that this policy will not cover gradual pollution. Gradual Pollution is covered under a separate insurance policy known as Environmental Impairment Liability Policy.
  7. Liquor Liability: Liquor Liability covers the liability that arises if the customer consumes excessive liquor beyond his capacity and the hotel/restaurant does not prevent its customer from consuming alcohol beyond his capacity, and after consuming the liquor, the customer causes bodily injury or property damage to third parties. Note that the bodily injury or property damage to third parties can occur even outside the premises.
  8. Incidental Medical Malpractice: This is another add-on cover which is important for hotels. Consider a case where a hotel guest falls sick and the hotel doctor treats the guest. However, something goes wrong with the doctor's treatment as a result of which the guest suffers from illness or injury, the liability will fall on the hotel. This liability will be covered under the Incidental Medical Malpractices Extension of the CGL Policy. This Add-On Cover is more important for places like Malls, Hotels, Cinemas which will have guests.
  9. Vicarious Liability covering Contractors, Sub Contractors, Vendors, Suppliers, Agents etc: This Extension covers the liability arising out of Bodily Injury and Property Damage to Third Parties on account of any action of the Contractors, Sub Contractors, Vendors, Suppliers or Agents of the Insured Party.
  10. Terrorism Legal Liability: This Add-On Cover covers the liability arising out of Bodily Injury and Property Damage to Third Parties on account of Terrorist Acts.
  11. Transportation Extension: Earlier I had shown you the example of a blast resulting in damages. This extension covers liability arising out of bodily injury or damage occurring on account of the product being transported.
  12. Lift and Escalator Liability: This extension covers the legal liability on account of Bodily Injury and Property Damage occurring in the lift and escalators of the building.
  13. Non-Manual Visits of Employees Overseas: This is another important Add-On Cover. This extension covers the liability arising out of third-party property damage or injury caused by the employee on account of his work when the employee goes overseas on a business tour.
  14. Non-owned and Hired Automobiles Liability - This is also a popular Add-On Cover but it is not required in India because a Car Insurance Policy covers the vehicle whereas outside India, Motor Insurance covers the individuals. This Extension covers liability expenses for accidents caused by vehicles which are hired and not owned by a company for its work purposes.

What are the Benefits of a Comprehensive General Liability Insurance Policy?

A CGL Insurance Policy offers the following benefits:

  1. Coverage against Bodily Injury and Property Damage Claims: Accidents are common and if an injured party sues the company for bodily injury or property damage, the business might have to pay Crores of Rupees in damages. This might put a financial strain on the company.
  2. Coverage against Reputation Damage: Apart from Bodily Injury or Property Damage Claims, a CGL Policy also provides coverage if the affected party sues the company for libel and slander for something you or your employees inadvertently said.
  3. Coverage against Personal and Advertising Injury: An additional Coverage offered under a CGL Policy is that of Personal and Advertising Injury. For example, if the Insured Company gets sued for Copyright Infringement, such a claim would be covered by a Comprehensive General Liability Insurance.
  4. Peace of Mind: A CGL Policy offers Peace of Mind since the Insured is secure in the knowledge that the business is protected against various claims which are increasingly common in everyday scenarios.

Examples of Claims covered by a Commercial General Liability Insurance Policy

Commercial General Liability Insurance Policy provides coverage for a wide range of claims faced by businesses when they are conducting their normal business operations.

Some examples of Commercial General Liability Insurance Claims covered by the CGL Policy are as follows:

Slip and Fall Accidents

If a customer trips and falls on your business premises and sustains injuries as a result, the customer might sue the business owner. A CGL Policy will provide coverage for Defense Costs and Compensatory Damages in such a case. Such kinds of claims are common for restaurants, hotels and malls.

Product Liability Claims

If a product manufactured or sold by the company is defective and causes injury or illness to the product user, the consumer might sue the company in such a case.

A Commercial General Liability Insurance will provide coverage for such claims.

Advertising Injury Claims

A Commercial General Liability Insurance Policy also cover claims alleging Libel, Slander, Copyright Infringement arising in the course of advertising the Insured Company's products.

Thus, a CGL Policy provides coverage against a wide range of claims likely to be faced by businesses in everyday situations.

Who needs to purchase a Comprehensive General Liability Insurance Policy?

Every business, whether small or large, should purchase a Commercial General Liability Insurance Policy to protect itself against claims of bodily injury or property damage on the Insured Company's business premises or on account of using the Insured Company's Products.

Who needs to purchase a Comprehensive General Liability Insurance Policy?
What is the Claims Process for a Commercial General Liability Insurance Policy?

What is the Claims Process for a Commercial General Liability Insurance Policy?

The Insured needs to follow the below mentioned steps in order to file a Claim under a Commercial General Liability Insurance Policy:

  1. Step 1: Intimate the Claim to the Insurance Company as soon as possible
  2. Step 2: Submit the necessary details such as Policy Number, Date and Time of Accident, Description of the Accident, legal notice received etc.
  3. Step 3: Submit the documents required for a Commercial General Liability Insurance Claim such as ID Proofs, GST Certificate, Claim Form, Legal Notice etc.
  4. Step 4: The Insurance Company appoints a surveyor to examine the facts of the incident.
  5. Step 5: If the claim is admissible, the Insurance Company has a Duty to Defend the Insured against the lawsuit by providing an advocate to defend him

How much does a Commercial General Liability Insurance Cost?

The Cost of a Commercial General Liability Insurance Policy is quite reasonable and depends on the following factors:

  1. Nature of Business and Industry: CGL Insurance Premiums will be higher for high risk businesses
  2. Limit of Liability Required: The Limit of Liability required will also impact the premium of the CGL Insurance Policy. Higher the limit of liability, higher will be the premium of the Commercial General Liability Insurance Policy
  3. Coverage: The level of coverage sought is also an important factor which impacts the Cost of Commercial General Liability Insurance Policy.
  4. Prior Claims Experience: The Prior Claims Experience of the Insured will also impact the Cost of Commercial General Liability Insurance Policy.
How much does a Commercial General Liability Insurance Cost?

What is not covered under a Commercial General Liability Insurance Policy?

A Commercial General Liability Insurance Policy typically excludes the following:

Exclusions under a Commercial General Liability Insurance Policy
Bodily Injury or Property Damage occurring due to Willful Misconduct of the Insured Damages that the Insured Person becomes obligated to pay on account of Liability assumed in a Contract
Exemplary or Punitive Damages Fines or Penalties
Multiplied Portion of any Multiplied Damages Award Bodily Injury or Property Damage arising out of Actual or Alleged Discharge of Pollutants
Expenses or Loss incurred on Recall or Disposal of Product Damages or Loss arising out of the rendering of Insured's Professional Service or Advice
Bodily Injury or Property Damage occurring on account of Infringement or Violation of any Intellectual Property Laws or Rights Bodily Injury or Property Damage to the Insured's Employee while performing duties related to the conduct of the Insured Person's Business

Will my Commercial General Liability Insurance Policy Cost be higher if I purchase the Policy through an Insurance Broker?

No, your Commercial General Liability Insurance Policy Cost will not be higher if you purchase a CGL Policy through an Insurance Broker.

In fact, since an Insurance Broker is empanelled with multiple Insurers, they would negotiate your Quotes with multiple Insurance Companies. This will, in fact, enable you to get lower your Commercial General Liability Insurance Cost compared to the CGL Premium Quote that you would have received by yourself. Additionally, Insurance Brokers would make sure that you obtain a Comprehensive Cover suited to your Risk Exposures.

You can read our detailed blog post about how much does a Commercial General Liability Insurance Policy Cost?

Will my Commercial General Liability Insurance Policy Cost be higher if I purchase the Policy through an Insurance Broker?
Cover for Bodily Injury and Property Damage

Cover for Bodily Injury and Property Damage

Cover for Personal Injury and Advertising Injury

Cover for Personal Injury and Advertising Injury

Worldwide Cover

Worldwide Cover

Coverage for Ongoing Operations and Completed Operations outside premises

Coverage for Ongoing Operations and Completed Operations outside premises

24/7 Claims Settlement Assistance

24/7 Claims Settlement Assistance

Get a FREE 1 Hour Consultation for your Commercial General Liability Insurance Policy

Let us tell you why a CGL Policy is important:

Every business has some sort of Risk Exposures from their Customers, Vendors etc.

In today's times where litigation is on the rise, a small suit can make you potentially liable for Damages to the tune of Crores of Rupees.

Consider, a case where a Customer falls in your Business Premises or gets Electrocuted. Such incidents are not uncommon. An Adverse Ruling may make you liable for Huge Damages.

Thus, having a Comprehensive CGL Policy may save you from Crores of Rupees in Damages. A Commercial General Liability Insurance is a must have for your business.

You can get a FREE 1 Hour Consultation for your Commercial General Liability Insurance at support@qian.co.in or 📞 022-35134695"> 📞 022-35134695 or fill this Contact Form.

Get a FREE 1 Hour Consultation for your Commercial General Liability Insurance Policy

FAQS

What does a Commercial Liability Insurance Cover?

A CGL insurance policy covers the following:

  • Bodily Injury and Property Damage
  • Personal Injury and Advertising Injury
  • Medical Payments
What is the cost of a Commercial Liability Insurance Policy?

The Cost of a Commercial General Liability Insurance depends on following factors:

  • Limit of Liability
  • Risk of the Business
  • Coverages Required

If you wish to avail of a Commercial General Liability Insurance for your business, you can email us at support@qian.co.in

We assure you of a competitive quote from top Insurance Companies in India

Testimonials

Average Customer Rating:

0 / 5 Star (0 reviews)