February 20, 2025
What’s in a Basic Liability Policy?
We often write about many of the policies that expand upon the coverage offered in a basic Commercial General Liability (CGL) policy. But what are the main features of the CGL coverage?
The CGL provides broad protection for businesses against third-party claims arising from bodily injury, property damage, and certain personal and advertising injuries. Here’s a breakdown of key coverages:
- Coverage A: Bodily Injury and Property Damage Liability
- Bodily Injury: Protects against claims for physical injury, sickness, or disease caused to a third party due to the business’s operations or premises.
- Property Damage: Covers damage or loss of use of tangible property owned by others, caused by the insured’s operations, products, or completed work.
- Key Exclusions: Coverage does not apply to intentional harm, pollution (without an endorsement), or damage to the insured’s own property.
- Coverage B: Personal and Advertising Injury Liability
- Covers claims for offenses such as defamation, libel, slander, false arrest, wrongful eviction, and infringement of copyright in advertisements.
- Key Exclusions: Excludes claims involving breach of contract, knowingly false statements, and advertising for businesses in specific prohibited industries.
- Coverage C: Medical Payments
- Pays medical expenses for injuries to non-employees on the insured’s premises or due to the insured’s operations, regardless of fault.
- Key Exclusions: Does not cover injuries to employees or injuries arising from certain high-risk operations.
- Supplementary Payments
- Includes legal defense costs and other related expenses, such as court fees and bail bonds, in defending covered claims.
- Additional Features:
- Occurrence-Based Coverage: Most CGL policies cover claims arising from incidents that occur during the policy period, regardless of when the claim is made.
- Aggregate Limits: Specifies limits for the total amount payable for all claims within the policy period.
- Common Exclusions:
- Professional services (covered under separate Errors & Omissions policies).
- Pollution (unless specifically endorsed).
- Liquor liability for businesses manufacturing, selling, or serving alcohol.
- Damage to the insured’s work or product (often covered under a separate products-completed operations policy).