Commercial General Liability (CGL)

 

Understanding Insurance is always a tough call for any business owner, especially if it is liability insurance.

What falls under liability, what does not is a bit difficult to comprehend. Liability usually means legal liability.

Liability means the responsibility towards a third party for any injury damage that occurs to the owner’s premises, occupation, business activity etc. To simply put it, it is the compensation payable to the aggrieved party.

 

To cover the overall liability Commercial General Liability (CGL) is best suited for Organization’s, Establishments.

It is important to understand the difference between Public Liability & CGL policies. While Public Liability covers a part of the liability CGL is a comprehensive cover.

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What Is Commercial General Liability (CGL)?

 

·       Commercial General Liability Policy covers liability like personal injury, bodily injury and property damage that occur on the business premises arising out of business operations or products.

 

·       CGL operates as a combination of Public Liability and Product Liability Policy and offers various supplementary covers. Commercial general liability is comprehensive insurance though it does not cover all the risks of a business.

 

How does Liability arise?

Liability arises as a result of ownership/use of premises/activity/products as detailed below:

 

w  Ownership, use or possession of premises

w  Manufacture, sale, distribution of products or services

w  Property of others in care, custody & control

w  Vehicles- automobiles, aircrafts, boats etc.

w  Professional activities

w  Fiduciary relationship

w  Occupation related injuries/ diseases

 

What is the Coverage?

·       Public Liability

·       Product Liability

 Public Liability Covers: Premises related liability or general liability

Any claim for legal liability arising due to an accident causing bodily Injury and property damage to third parties

arising from:

           -   Manufacturing Operations

           -   Pollution

           -   Transportation

           -   AOG Perils

Details of Cover:

      Coverage A – Bodily Injury & Property damage   

      Coverage B – Personal & Advertising injury

      Coverage C – Medical Expenses

      Coverage D – Fire Damage to rented premises

      Coverage E – Product Recall

 

  Product Liability &   Completed Operations:

 

w  Product means any tangible property after it has left the custody or control of the insured which has been manufactured by the insured or on behalf of the insured.

w  Product liability covers bodily injury and property damage including defense costs arising out of defect in the product manufactured.

Completed operations liability is for bodily injury or property damage claims that would occur after the completion of a project, resulting from the negligence of the work performed.

 

For example: a contractor builds a parapet wall for the terrace and fails to secure the railing properly,

if someone leans on the railing and suffers bodily injury, claim will be triggered under the completed operations portion of policy. However this does not cover the faulty work itself just the resulting bodily injury and or property damage.

 

 

       Personal and Advertising injury: Means arising out of one or more of the following offences:

w  False arrest, detention or imprisonment

w  Malicious Prosecution;

w  Wrongful eviction or wrongful entry

w  Defamation libel or Slander including Product Disparagement.

 

      Medical expenses are payable for bodily injury caused by an accident:

       -  On premises owned or rented;

       -  On pathways, ways next to premises owned or rented because of operations

 

     Product Recall: Recall of product caused by –

w  Accidental omission, introduction/ substitution of a component or a substance during manufacturing

w  Error by the insured in the manufacturing, blending, mixing, packaging, labeling or storage.                

Recall expenses

Covers cost to inspect, withdraw or destroy the product including

w  Communication(radio, TV ads)

w  Shipping from purchaser, distributor or user

w  Overtime & additional costs

w  Storage & redistribution costs

w  Recall consultants costs

w  Costs of examination & reworking of recalled products

 

More add-ons can be added as per the requirement of the client like any specific liability peculiar to the nature of operations.

 

What is the Sum Insured?

Sum Insured covers the cost of hiring lawyers to defend the company or the cost of settling the claims.

Depending on the nature of business, hazards involved and the brand image of the Company the costs vary so sufficient adequate cover must be chosen.

 

Conclusion:

 

Protecting one’s business from a variety of risks, including the risk of a lawsuit arising from everyday business activities, with a commercial general liability policy is recommended as it reduces liability risk.

 

We at Zen Insurance assist in choosing the right coverage that fits your needs and budget. Plan your Insurance Program wisely and contact us for assistance.

 Disclaimer:   

Zen Insurance is an IRDAI registered broker which facilitates quick & accurate insurance broking services. We deal with only regulator approved products of insurers. We do not underwrite the products.