Commercial General Liability Insurance (CGL) - Necessary Coverage

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Commercial General Liability Insurance (CGL) - Necessary Coverage

As one of the more common types of liability insurance policies purchased in Canada the Commercial General Liability Insurance policy is an important piece of the insurance buying process. The Commercial General Liability policy commonly referred to as CGL is intended to defend and indemnify a business facing a claim by a third party alleging property damage or bodily injury resulting from an "occurrence." Other additional coverages can include Personal Injury and Advertising Injury, Tenants Legal Liability and Medical Payments coverage. The CGL policy in Canada is not uniform across all insurance companies as each insurer has their own wording. While there are some significant differences among the wordings most of the essential terms and conditions of the Commercial General Liability Insurance policies are very similar, if not identical.

Commercial General Liability - what does it entail?

Commercial General Liability Insurance policies is written on an "occurrence" based form which means that the event or occurrence that is the subject of the loss must have occurred during the policy period. For example, in order to trigger coverage under the property damage and bodily injury section of the policy either property damage or bodily injury must have occurred during the policy period caused by an occurrence (includes insured negligence) which takes place in the coverage territory for which the insured is legally obligated to pay compensatory damages. The CGL policy includes a "per occurrence" limit as well as an "aggregate" limit. Per occurrence refers to the most the policy will pay for any one occurrence/incident. Aggregate refers to the total amount that the policy will pay out during the policy period or term. Most CGL policies are written for a 12 month period. For example, if a company has a $1,000,000 per occurrence limit and a $2,000,000 aggregate limit and is successfully sued for $1,500,000, the insurer will only pay $1,000,000 because the claim is $500,000 more than the per occurrence limit on the policy. This then reduces the aggregate limit from $2,000,000 down to $1,000,000 for the remainder of the policy period. The Commercial General Liability Insurance policy is not intended to provide coverage for claims arising from the rendering or failure to render professional services. The differences between the CGL policy and the Professional Liability policy is often misunderstood. In order to provide coverage for professional services that a business provides a Professional Liability or Errors & Omissions Liability policy needs to be purchased.
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Commercial Liability Insurance - how will it help you?

In today's litigious business environment where even small incidents can result in large lawsuits the Commercial General Liability policy is a very important component of the overall insurance buying process. This article provides an overview of some of the key issues in relation to the CGL Insurance policy although it is not intended to be a comprehensive analysis of this type of coverage. As mentioned in the article, the coverage can vary from policy to policy and as a result the policy wordings must be reviewed carefully by a registered insurance broker who specializes in this coverage to ensure that it meets the requirements of the business in question.

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