What Happens if a Customer Gets Injured Without CGL?
What is CGL?
A commercial general liability (CGL) policy protects businesses from claims arising from their operations or sale of products.
Why should a business owner get CGL?
A CGL policy protects you and your employees from lawsuits involving covered events that occur on your premises or arise from your operations or your sale of products. Covered incidents can include:
Bodily injury — injury to a third party on your property
Property damage — damage to a third party’s property
Product liability — a product the business provides that causes bodily injury or property damage
Reputational and professional liability — advertising that results in libel, slander, or copyright infringement, or an error that results in a client’s financial loss
Also, clients or vendors may require CGL coverage to do business with a company.
What happens if a customer is injured and the business owner does not have CGL?
The owner’s company assets are at risk in the event of a lawsuit. They also bear the cost of their legal defense and any damages, including medical costs.
How is CGL different from a Businessowners Policy (BOP) or Commercial Package Policy (CPP)?
Businesses of any size can get a CGL policy, although it’s primarily used by mid– and large–sized companies for liability protection. However, not all businesses are eligible for a BOP, which is designed for small businesses. Mid– and large–sized businesses are written under a CPP. CGL provides liability insurance, while a BOP and CPP bundles other coverages with liability insurance.
What is the difference between occurrence and claims–made policies?
Occurrence policies cover claims for incidents that occur during a policy period — no matter when the claim is reported. Claims–made policies only cover claims that occur and are reported during the policy period unless special coverage known as a “tail” is purchased.
Before deciding which policy is best for your business, be sure to contact a licensed business insurance broker or agent who can provide more detailed information and answer any questions you have.
Sources:
Craig F. Stanovich, No Harm, No Coverage — Personal and Advertising Injury Liability Coverage in the CGL (Part 1), https://www.irmi.com/articles/expert-commentary/no-harm-no-coverage-personal-and-advertising-injury-liability-coverage-in-the-cgl-part-1, (January 2007)
Business Liability: What if Someone Gets Hurt?, https://aofund.org/resource/business-liability-what-if-someone-gets-hurt
Commercial general liability insurance, https://www.iii.org/article/commercial-general-liability-insurance
Andrew Ancheta, Commercial General Liability (CGL), https://www.investopedia.com/terms/c/commercial-general-liability-cgl.asp, (Updated October 24, 2020)
Erik J. Martin, Commercial General Liability Insurance Guide: Everything You Need to Know, https://www.uschamber.com/co/start/strategy/guide-to-commercial-general-liability-insurance
The information contained in this article is for informational purposes only, should not be construed as professional advice and is not intended to replace official sources. Other resources linked from these pages are maintained by independent providers; therefore, NJM cannot guarantee their accuracy. Furthermore, this article is not an insurance policy, and does not, in any way, replace or modify the definitions and information contained in individual insurance policies. Terms and coverage availability may vary by state, and exclusions and deductibles may apply. Discounts also vary by state and may not be applied to all policy coverages. Coverage for an accident or loss is subject to the terms and conditions of the insurance policy applicable to a particular claim.
