Commercial General Liability Insurance


Wed 18 Jul 2018 00:00:00 UTC

Commercial General Liability Insurance

Overview


Also known as General Third Party Liability, Comprehensive General Liability, or CGL for short, this plan covers a range of liabilities faced by a business. The major protections available are against bodily injury, damage to property, advertising injury and legal liability for the insured business because of a personal injury to a third party.

It is possible to package product liability and public liability along with Commercial General Liability policy.

Who would take a CGL policy?


Many Contractors, Vendors, Sub-contractors etc. are required to take this policy when they accept a contract, especially when they have to do business on the premises of the contracting organisation.

For example, Security firms, Catering firms, other service providers such as employee wellness firms, etc. who would be doing business on the organisation’s premises.

Companies setting up offices in other countries, especially in the developed world, will need to get Commercial General Liability insurance for all the premises. It is possible to insure a company and all its subsidiaries under one policy.

In general, the larger a company grows, the larger the risk of a third party litigation grows, and in that interest it is always advisable to have a CGL cover in place.

CGL policies can also be extended to cover product liability, ie any legal liability arising from the manufacture or sale of products. The premises where manufacture/sale etc are carried out must all be named in the policy.

Terms

Commercial General Liability Insurance (CGL) offers coverage against claims of physical injury or property damage in relation to the business of the Insured.

Limit of Indemnity

This is the sum insured, the maximum the insurer will pay as claim amount under this policy. It is split into two, Any One Accident(AOA), which is the maximum the insurer will pay for a single claim; and Any One Year(AOY) which is the maximum the insurer will pay during a single policy year.

Retention/Deductible

Every liability policy has a deductible, or retention, which is the amount the policyholder has to pay out-of-pocket in case of a claim

Pricing factors

Premiums depend on a variety of factors, including the nature of work done, limit of liability, territory of coverage(limited to India, worldwide or anything in between), number of clients, the infrastructure of the facility, etc.

Scope of Cover

The Policy covers:

* Any director, executive officer or worker of the Insured
* Any Principal, in respect of that Principal’s vicarious liability for the negligent acts or omissions of the Insured
* The officers, committee and members of the Insured’s canteen, social, sports, first aid/ medical, fire fighting and employee welfare organizations in their respective capacity as such or
* The legal personal representative of any person entitled to indemnity under the policy in circumstances giving rise to indemnity under this policy
Designated Premises Clause

Cover is extended to claims arising from listed premises only. You can add premises to the policy.

Benefits

Benefits in a CGL policy are flexible, and in some cases certain benefits may not be offered because of high risk factors. Given below is a list of the most commonly available benefits in Commercial General Liability Insurance:

Defence costs

Legal defence costs. Insurer may choose to appoint their own lawyers; or work with your appointed legal counsel. ALong with Court mandated payments, this is a base benefit of every policy.

Personal & Advertising Injury

Any claim filed because you were alleged to have advertised unfairly against a competitor

Medical Expenses Extension

Medical expenses of anyone who gets injured at your premises and files a claim. Generally sub-limited.

Incidental medical malpractice Cover

Any claim filed for medical malpractice against you, provided you are not a healthcare organisation, w.r.t. emergency first aid, office doctor, nurse, etc.

Covers any claim filed against you by your landlord because of your actions as tenant(permanent damage, etc.)

Care, Custody & Control Cover

Any claim filed because of damage to property under your care, custody and control. Sometimes this is grouped with valet parking liability and automobile liability for a combined sub-limit.

AOG Perils Cover

Claim filed against you because of damage due to an Act of God at the designated premises

Sudden and Accidental Pollution Cover (India Only)

Any unforeseen incident that causes pollution to surrounding areas is covered in case of a claim. Coverage is only given up to losses within a 72 hour period.

Food and Beverage Cover

Any claim arising due to Consumption of Food and Beverages at the designated premises

Lift Liability Cover

Cover for Elevator related accidents, etc

Cross Liability Cover

Any liability claim made by one party insured in the policy against another.

Events, Exhibitions, Training & Promotional Activities Cover

Claim arising due to any events of the above nature at the designated premises

Travelling business executives Extension

Cover extended to travelling business executives, provided the work they do doesn’t involve manual labour of any kind.

Auto Inclusion of New Subsidiaries Extension

Any new subsidiaries can be added to the policy automatically, provided their turnover is less than 20% of your total revenue

Any legal liability arising from terrorism related activities including legal defence costs. This benefit is generally limited to India only.

Automobile Liability

Any claim arising due to automobiles not owned or hired by you. Owned and hired automobiles are not covered explicitly in a CGL policy in India, because the motor policy of the vehicles in question will cover the losses anyway.

Valet Parking Liability

Any claim arising because of actions of your valet or parking facilities. This is sometimes grouped with automobile liability under a combined sub-limit

Exclusions

Wilful negligence, fraud, criminal intent

Any negligence, fraud, or action that is found to be committed intentionally is not covered.

Any claim payment that would place sanctions on the insurer by regulatory or government authorities is also not covered. This is known as sanctions & limitations clause.

Contractual liability

If you have a contract that specifies a certain monetary penalty in case of failure of service, that payment will not be covered.

Liability covered by other policies

A CGL policy will only cover liability claims arising from bodily injury or property damage, on the designated premises.

Any claim that would be covered under a Errors & Omissions Liability policy, or a Workman’s Compensation policy, cyber liability policy etc. will not be covered by a CGL policy.

Perilwise allows you to customise your CGL quote and get instant quote estimates online, check it out now!