Necessity of Commercial General Liability Insurance
Commercial general liability insurance is sometimes called CGL and essential to your business whether it is a sole proprietor, a partnership or corporation. Also, this can be called as third party liability.
Frequency of Lawsuits and Specific Incidents
It provides protections against financial loss incurred by litigation due to property damage, bodily injuries or death caused by your services, operations or your employees. Lawsuits happen against businesses all the time. Slip and fall incidents at business premises, such as restaurants, offices and retail stores, are often brought to a lawsuit.
Commercial General Liability Insurance can be a risk management tool
Whether you are legally liable or not, the insurer of commercial general liability insurance would have duty to defend you against the lawsuit. The defence cost is usually included with the insurance policy. CGL would be first defence for your business and yourself. That is why CGL is a most common risk management tool against liability suits. It is good idea to check a website of Insurance Bureau of Canada for reference.
How the insurance works
Often your landlord, government, business partners and buyers such as Alibaba, eBay or Walmart require commercial general liability insurance.
When you are a tenant, your commercial general liability or third party liability insurance coverage should be written on an “occurrence” form rather than a “claims made” form. In an occurrence form coverage is crystallized when the injury or damage takes place regardless of when the claim is made. As such, even if an insurance policy is not renewed following an accident, the policy continues to cover claims arising out of that accident.
In a insurance claims made form
The policy covers claims first made during the policy period, regardless of when the accident or the injury or damage occurred. However, once the policy expires, if no claim was made, and the insurance company was not notified of a claim or of an incident that could result in a claim, the insurance company has no liability. However, there are types of industries where claims made coverage is the norm.
Product Liability (Third Party Liability) and Completed Operations
CGL insurance often includes product liability arising from all of products and all of your operations. On the other hand, you can exclude product liability or completed operation, and make the commercial general liability at premises only in order to save the premium but the coverage is very limited.
Components of Commercial General Liability Insurance
Most of Commercial General Liability insurance policy consists of 4 sections of coverage:
A. Bodily Injury and Property Damage Liability
B. Personal and Advertising Liability
C. Medical Payments
D. Tenants’ Legal Liability
Here are details;
Bodily Injury and Property Damage Liability
If your business operations, products, services, employees, or any other aspect of your business cause bodily injury or property damage to someone, you or your business may be legally responsible. In such cases, the business is obligated to provide compensation to the injured or damaged third party.
Commercial general liability insurance has various exclusions, including but not limited to:
- Expected or Intended Injury
- Contractual Liability
- Workers’ Compensation and Similar Laws
- Employer’s Liability
- Aircraft or Watercraft
- Damage to your Property / Work / Product
- Impaired Property or Property not physically insured
- Recall of Products, Work or Impaired Property
- Violation of Any Law as to Age
- Electric Data
- Personal and Advertising Injury
- Personal Services
- Asbestos, Fungi or Spores
- Nuclear Energy Liability, Pollution, Terrorism, War Risks
- Waiver of subrogation to the landlord
Some of these exclusions may be covered with endorsements.
Personal and Advertising Injury Liability
Commercial general liability insurance includes coverage that protects you against lawsuits resulting from actions by you or your employees that damage the reputation or character of a third party.
Personal and advertising injury
It often involves consequential bodily injury, can arise from offenses such as false arrest, malicious prosecution, wrongful eviction or entry, invasion of private occupancy rights, oral or written material that slanders, libels, or disparages a person or organization, violation of privacy rights, use of another’s advertising idea, and infringement of copyrights, trade dress, or slogans in your advertisement.
This coverage is crucial for safeguarding your business and assets.
The insurer pays medical expenses of a third party for bodily injury caused by an accident due to your operations. The payment would be made regardless of fault. The medical expenses would mitigate the possibility of legal liability of the insured.
Tenants’ Legal Liability
Tenant’s Responsibility and Legal Liability Coverage
When you are leasing or renting premises from the landlord, you are responsible for property damage to the landlords’ property. The tenants’ legal liability coverage defends an action against you to recover the cost of repair or replacement of the property. This applies only to property damage to premises of others rented or occupied by you.
Coverage Limits Based on Leased Space
The limit of coverage corresponds to space of premises you lease or rent. For example, if the space you lease were 500 sq./ft., the limit would not be over $1,000,000 because then replacement cost of the space would be $2,000 per square feet, which would not be realistic.
Commercial General Liability Insurance and Our Services
Sometimes your landlord, clients, business partners or the government require commercial general liability insurance. We will find the best coverage needed for your business. You may need liability insurance certificate to proceed with your business, let us issue it in a timely manner. We offer coverage to the businesses anywhere in Metro Vancouver, Lower Mainland, Kelowna, Kamloops and Vancouver Island, BC.
We work for you to find the best coverage with best values. We do not give up. Wherever is your business in BC, Alberta, Toronto, GTA or Ontario you can count on us.