Businesses face unexpected risks, but commercial general liability insurance (CGL) protects the business owner from financial loss stemming from injuries to customers on his property or damages caused by his equipment on another's property. "Commercial" means the coverage is for businesses, and "liability" indicates incidents the business owner, or his employees, might be responsible for, either directly or by neglecting to provide a safe environment.
Function
Commercial general liability insurance covers the business owner from lawsuits brought by an injured party. While there are numerous exclusions to coverage, in general, the CGL will pay for injuries caused to a person through carelessness, an accident or a mistake that injures a client, a customer or even a passerby. In addition, damages to property by the business owner or his employees may be covered.
Limits
The commercial general liability policy has limits. The policy offers a per occurrence limit as well as a lifetime limit. If the business owner files a claim for damages to a client's car when a worker backs a truck into it, that would count as one occurrence, and the payout would count toward the policy's lifetime limit.
Exclusions
The list of excluded damages may be much longer than the list of covered damages. If the business owner suffers damage to his equipment, his building or his inventory, the CGL policy may not cover the costs. In addition, it will not pay medical costs for an employee hurt on the job if the owner did not carry sufficient worker's compensation insurance. In addition, the policy may not cover the owner for financial loss resulting from accusations of slander or sexual harassment. Because policies vary from insurer to insurer, the business owner should compare the exclusions carefully.
Cost
The cost of a commercial general liability policy depends upon the amount of protection the business owner needs and the number of employees he has. For a small business with one or two workers and no recent claims, the annual fee might be a few hundred dollars, while a large construction company with many workers might pay tens of thousands of dollars every year for coverage.
Considerations
Like other insurance policies, business owners can shop around for the best rates. Because commercial general liability insurance covers only a narrow range of claims, the business owner must purchase additional insurance to cover damage to his own business, vehicles, inventory and employees.
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