Commercial Liability

Commercial general liability insurance is coverage that will protect your business if someone files a lawsuit against you. It is often used to cover claims against your business for injury or property damage. Typical examples include if a customer is injured at your place of business, or if an employee damages property at a client's site.

Without a commercial general liability insurance policy, you are leaving yourself and your company vulnerable to lawsuits that could have a devastating impact on your business.

What's covered?

There are four main types of coverage included in the standard Commercial General Liability (CGL) policy:

1. Bodily Injury and Property Damage Liability
   This type of coverage is used if your company, your product, your work, your employees, or anything else associated with your company causes physical injury to another person or damages their property or belongings. If held legally responsible, you may be required to pay. In a case like this, your coverage will pay for the compensatory damages with the purpose to put things back the way they were (financially) prior to the injury or damage.
   
2. Personal Injury Liability
   The phrase 'personal injury' can be confusing because in the insurance world it means one thing, and everywhere else it often means something different. While most people associate ‘personal injury’ with physical injury, this is not the case with a CGL policy. In a CGL policy, this actually means damage of a person’s character, reputation and position in the community as a result of libel (in print) or slander (verbal defamation). Another distinction to remember is that the policy is only to protect you if you’re accused of libel or slander, not the other way around.
3. Medical Payments
   In the event that an accident happens at your company’s premises or as a result of your company’s operations, your CGL policy will pay minor medical expenses. This coverage can be used even if you are never held legally liable for the accident. In fact, it’s often used as a way to avoid a costly lawsuit.
4. Tenants' Legal Liability
   If you don't own the space where you’ve set up a shop or rent your office, this type of coverage is for you. If you are held legally responsible for causing a fire, explosion, smoke damage or other damage caused by fire protection (like sprinklers going off) then this coverage will pay the compensatory damages. Remember, the intent of compensatory damages is to put things back the way they were. This applies only to damages of the rented premises–not the property (i.e. product, inventory etc.) that you may personally own.

The primary reason for professional liability insurance is that a typical commercial general liability insurance policy will only cover a bodily injury, property damage, personal injury or advertising injury claim. If your business is accused of negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice, you still need additional protection.

Professional Liability insurance is also known as Errors and Omissions coverage or Professional Indemnity Insurance and may also even take on different names depending on the profession. For example, professional liability insurance in reference to the medical profession may be called Medical Malpractice. Notaries may take out errors and omissions insurance (E&O). Some examples of other potential E&O policyholders include real estate brokers, appraisers, management consultants and software developers.

This coverage focuses on the failure to perform, financial loss and error, or omission of the products or services sold. Additional coverage for breach of warranty, intellectual property, personal injury, security and cost of contract can also be added. Basically, this coverage could benefit any business that provides advice or gives a service. It is also sometimes required under contract by other businesses that are the beneficiaries of the advice or services given.

Professional liability insurance policies are generally set up based on a claims-made basis, meaning that the policy only covers claims made during the policy period. Claims which may relate to incidents occurring before the coverage was active may not be covered. However, these policies will have a retroactive date which can operate to provide cover for claims made during the policy period, but which relate to an incident after the retroactive date (where the retroactive date is earlier than the inception date of the policy). It is important to continue your coverage because cancelling the policy, may make it as if you never had coverage for any incidents in the first place.

Directors and officers of public, private or non-profit company’s can be held liable for both the actions, and inactions, of the businesses they are responsible for. Other policies leave gaps in coverage that can leave you at risk.

With Director’s and Officer’s liability, you are protected from:

Serious disruption of management’s time

Loss of personal assets

Protects corporate assets from the costs of expensive legal proceedings

Provides access to claims and legal personnel in this field of expertise

Provides framework for a focused corporate strategy for dealing with claims, allegations and lawsuits

Claims against past wrongful acts that have gone unprotected