What Does Commercial General Liability Insurance Cover?
A standard Commercial General Liability policy, occurrence coverage, may cover:
- Costs to defend or investigate a suit or claim against the insured, including court costs, witness fees, attorney's fees and police report costs.
- Reasonable expenses associated with defense of the insured, such as loss of income for court appearances, mediation and discovery.
- Judgments or settlements resulting from covered suits, including interest required on the judgment and the injured party’s medical expenses, if your defense is unsuccessful.
- Premium for a bond that ensures you can satisfy a potential judgment in a liability suit, if required.
Alternate liability insurance options include “claims-made policies.” Claims-made policies link specific claims to insurance policies in force at the time of the claim’s qualifying incident. An occurrence, the event that caused the claim, can be a single incident or continuous and repeated incidents. This type of policy limits the inflation of claims and tracking issues that can occur with standard occurrence liability policies. To control risks, claims-made policies limit the time period for which a claim can be made.
Gaps and Overlaps
Commercial General Liability policies do not generally cover claims of injury or property damage from:
- Pollution caused by your company
- Use of nuclear material
- War
- Willful neglect
- Professional liability
- Misuse, destruction or distribution of data
- Acts of terrorism
Each insurer may include additional exclusions. Supplemental insurance policies are available to cover such exclusions. A Difference in Conditions commercial policy can fill the gaps in a traditional policy according to the insured’s needs. An Umbrella Insurance policy provides coverage beyond the limits of the standard CGL. After reviewing the standard insurance policy, draft a list of additional insurance needs and purchase additional policies accordingly.
Subcontractors
Subcontractors often need to carry their own liability insurance. As a contracting entity does not directly employ subcontractors, the contractor cannot provide coverage under their corporate liability policy. Ask a local commercial insurance specialist to advise in the proper insurance procedures for subcontractors in your state.
