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Commercial general liability insurance

Commercial general liability insuranceAs an independent insurance agent, I recommend one of the essential coverages to my business clients: commercial general liability (CGL) insurance. CGL is a foundational policy that helps protect companies from the financial risks associated with everyday business activities and accidents.

In my experience working with a wide range of businesses, I’ve seen firsthand how a CGL policy can make all the difference when unexpected incidents occur. Whether it’s a customer slipping and falling on your premises, property damage caused by your operations, or a lawsuit over alleged advertising injuries – CGL insurance provides the liability coverage you need to keep your business running smoothly.

Of course, navigating the ins and outs of CGL insurance can be complex, especially for business owners who are focused on the day-to-day demands of running their company. That’s where an experienced independent agent like myself comes in. I’m here to help you understand the key features of CGL coverage, determine the proper coverage limits for your unique needs, and find the most cost-effective policy on the market.

In the sections that follow, I’ll explore the fundamentals of commercial general liability insurance (CGL), explaining what it covers, why it’s so important, and how you can optimize your CGL policy to protect your business. Let’s get started!

What is Commercial General Liability Insurance?

Commercial General Liability (CGL) insurance is a vital component of a business’s risk management strategy. It provides coverage for claims of bodily injury, property damage, and advertising injuries that occur as a result of your business operations. This type of insurance is designed to shield businesses from the financial repercussions of lawsuits and third-party claims, which can arise even during routine business activities.

Protection Against Common Risks

CGL insurance covers a broad spectrum of risks that businesses commonly face. These include:

– **Bodily Injury**: If a customer or other third party is injured on your business premises or because of your business activities, CGL insurance can help cover medical expenses and legal costs.

– **Property Damage**: Damage caused to someone else’s property by your business operations is covered under CGL insurance, which can help pay for repairs or replacements.

– **Advertising Injury**: Claims of libel, slander, defamation, or copyright infringement in advertisements are also covered. This is particularly relevant in the digital age, where marketing efforts are widely disseminated.

Legal Defense and Settlements

CGL insurance typically includes coverage for substantial legal defense costs. These include attorney fees, court costs, and any settlements or judgments that may be awarded in a lawsuit. This aspect of CGL insurance is crucial as it ensures that a business can defend itself without jeopardizing its financial stability.

Business Requirements and Client Confidence

CGL insurance is often a requirement in contracts, leases, and by clients who may mandate that a business has this coverage before engaging in any professional relationship. This requirement is not just about risk management; it also signals to clients and partners that a business is responsible and credible. It demonstrates a commitment to operating safely and ethically, which can enhance business reputation and trust.

Financial Protection and Continuity

Having CGL insurance can be the difference between a business surviving a claim or facing financial ruin. It protects the business’s assets and ensures that it can continue operations even in the face of potentially crippling legal claims. For many businesses, this insurance is not just a safety net; it’s an essential tool for long-term sustainability.

Compliance with Legal Requirements

In some cases, carrying CGL insurance is a legal requirement, depending on the state or industry regulations. Failure to comply with these requirements can result in fines, penalties, or legal action, further underscoring the importance of maintaining adequate CGL coverage.


Coverage Exclusions

It’s important to note that CGL insurance does not cover all types of liabilities. Common exclusions include:

– **Professional Errors (Professional Liability)**: Claims related to errors in professional services or advice are not covered under CGL policies. These are typically covered by professional liability insurance.

– **Employee Injuries (Workers’ Compensation)**: Injuries to employees are not covered under CGL insurance and are instead covered by workers’ compensation insurance.

– **Intentional Acts and Discrimination Claims**: CGL insurance does not cover damages resulting from intentional harm or discrimination claims. These incidents require specialized coverage.

Why Businesses Need CGL Insurance

Contracts or leases often require CGL insurance, and many clients will not engage with businesses lacking this coverage. It provides a safety net that allows businesses to operate without the constant fear of financial ruin due to potential lawsuits. Even if not explicitly required, CGL insurance is essential for protecting a business against the unpredictable nature of legal claims related to its operations.

How Much CGL Insurance Do Businesses Need?

Determining the appropriate amount of Commercial General Liability (CGL) insurance for a business is a critical decision that can significantly impact the company’s financial security. While standard recommendations exist, the right coverage limits are highly individualized and depend on several factors.

Standard Coverage Recommendations

The commonly recommended starting point for CGL insurance coverage is $1 million per occurrence, with a $2 million aggregate limit. The per-occurrence limit is the maximum amount the insurance company will pay for a single claim. In contrast, the aggregate limit is the total amount the insurance company will pay for all claims during the policy period.

Factors Influencing Coverage Needs

**Business Size**: Larger businesses typically have more assets at risk and may require higher coverage limits to protect against potential claims adequately.

**Industry Risks**: Certain industries face higher liability claims risks. For example, construction companies may need higher limits than a consulting firm due to the increased risk of bodily injury on job sites.

**Customer Base**: Businesses that serve many customers or work with high-net-worth clients may need more coverage to protect against potential claims that could arise from their customer interactions.

**Contractual Requirements**: Some contracts may require a business to carry a certain amount of CGL insurance. Reviewing any contractual obligations to ensure compliance with these requirements is important.

**Asset Protection**: The level of coverage should also be influenced by the value of the business’s assets. Higher limits may be necessary to protect the company’s property and financial resources in case of a claim.

Consulting with an Insurance Agent

Given the variability in coverage needs, consulting with an experienced insurance agent who can provide personalized advice is advisable. An agent can assess the risks associated with your business and recommend coverage limits that align with your company’s risk profile and financial goals.

Regular Policy Reviews

It’s also vital for businesses to regularly review their CGL insurance coverage limits as their operations grow and evolve. Changes in business size, operations, or assets can necessitate adjustments to insurance coverage to ensure continued protection against liabilities.

How much is the average CGL Insurance $1 million per occurrence, with a $2 million aggregate limit?

The average cost of commercial general liability (CGL) insurance with coverage limits of $1 million per occurrence and $2 million aggregate is $597 per year or $50 per month for small businesses.

The key details are:

– The recommended coverage amount is typically $1 million per occurrence and $2 million aggregate.

– The average cost of CGL insurance with these coverage limits is $597 per year or $50 per month for small businesses.

This average cost can vary depending on factors like the business’s industry, size, and risk profile, but $597 per year or $50 per month represents a typical baseline for CGL insurance with the standard $1 million/$2 million coverage limits.

Insurance Options
Insurance Company Coverage Options Cost Customer Service Industry Specialization Financial Strength
Chubb Offers primary protection for bodily injury, property damage, advertising injury, and personal injury. Global extension options are available for overseas operations. Cost varies based on coverage needs, company size, and industry. Known for updating products to keep pace with customer challenges. Provides 24/7 protection for employees traveling outside North America. Specialized underwriting for technology companies and startups. Can insure domestic and foreign exposures. Strong commitment to continually update products to keep pace with customer challenges.
Nationwide Standard CGL coverage, liquor liability, owners/contractors' protective liability (OCP), and railroad protective liability (RRP). Various deductible options. Policies are offered at typical limits of $1 million per occurrence and $2 million aggregate; higher limits may be available on select risks. The brokerage underwriting team provides creative solutions for larger, more complex, non-standard risks. Covers various industries including artisan contractors, general contractors, and product manufacturing. Offers a variety of coverage solutions for small businesses in many industries.
The Hartford General liability insurance and property insurance in a Business Owner’s Policy (BOP). Also offers commercial package for more complex needs. Average cost for a $1 million limit policy is about $69 a month, or $824 annually. Over 200 years of experience and over 1 million small business customers served. Provides coverage for more than 300 classes of businesses. Tailored solutions for specific business needs. Over 200 years of experience in the insurance industry. Known for helping businesses meet unique needs.
Liberty Mutual Offers general, professional, and environmental liability. It also provides workers compensation, auto, property, surety bonds, etc. Cost varies based on business needs and risks. Products offered exclusively through independent agents. 24/7 claims reporting and online account management. Strong focus on the construction industry with tailored solutions for complex risks. Also serves a broad spectrum of industries. Strong financial ratings and stability, having weathered more than 100 years of industry changes.

top commercial general liability (CGL) insurance companies

**The Hartford** – Recognized for its comprehensive coverage and excellent financial strength, The Hartford is noted for its expertise in providing general liability insurance, particularly to small businesses and specific industries like construction and technology.

**Hiscox**—Known for offering a range of insurance products, including general liability insurance, Hiscox is highlighted for its services to small businesses, which include quick and easy online access and affordable premiums.

**Chubb**—Chubb is mentioned for its long history of insuring technology companies and its specialized underwriting services, which make it a preferred choice for startups and IT businesses.

**Liberty Mutual** – This company is recognized for its strong presence in the construction industry and its comprehensive range of coverages, making it a go-to insurer for many business sectors.

**Nationwide** – Nationwide is praised for its customer satisfaction and various coverage types, including general liability insurance tailored for various business needs.

**Travelers** – As one of the largest insurance companies, Travelers offers extensive general liability coverage options, particularly noted for its experience in the food and beverage and healthcare sectors.

**Acuity** – Acuity is highlighted for its specialized coverages for contractors and positive claims experience, making it a strong contender in the general liability insurance market.

What does a CGL provide liability coverage for?
A CGL policy provides liability coverage for bodily injury, property damage, personal and advertising injury, and medical payments.
What does CGL commercial general liability insurance policy do not cover?
CGL policies do not cover intentional acts of property damage or bodily injury, employee injuries, professional errors, pollution, and damages involving the use of automobiles.
Who is an insured under a CGL policy?
Insureds under a CGL policy can include the named insured, additional insureds added by endorsement, and certain individuals or entities such as employees, executive officers, and directors, depending on their roles and the nature of the claim.
What is the CGL limit of liability?
The CGL limit of liability refers to the maximum amount the insurer will pay for covered losses. It includes individual limits such as each occurrence, general aggregate, products-completed operations aggregate, personal and advertising injury, damage to premises Granted to you, and medical expense limits.
What are the two basic elements of CGL coverage?
The two basic elements of CGL coverage are Coverage A for bodily injury and property damage liability, and Coverage B for personal and advertising injury liability.
What is excluded under the CGL policy?
Exclusions under a CGL policy typically include expected or intended injury, contractual liabilities, liquor liability, pollution, aircraft, auto, or watercraft, and professional services.
Does CGL have a deductible?
Yes, CGL policies can have deductibles. The deductible is the amount that the insured must pay out-of-pocket before the insurer pays a claim.
What do CGL policy limits apply regardless of?
CGL policy limits apply regardless of the number of insureds, claims made, or suits brought. The limits do not increase simply because multiple claims or suits are filed.
How do you read a CGL policy?
To read a CGL policy, review the Declarations page for specific details about the insured, the coverages provided, limits, and premiums. Then, read the insuring agreements, exclusions, and conditions sections to understand what is covered, what is excluded, and the terms of coverage.
What is the standard commercial GL limit?
The standard commercial GL limit typically starts at $1 million per occurrence with a $2 million general aggregate limit, but these can be adjusted based on the insured's needs and exposure.