insurance

Commercial General Liability

Insurance coverage that protects businesses against claims of bodily injury, property damage, and personal injury caused by business operations, products, or premises. It covers legal defense costs and settlements for covered claims that occur during normal business activities.

Example

“When a customer slipped and fell in the restaurant, breaking their wrist, the commercial general liability policy covered the $25,000 medical expenses and legal fees.”

Memory Tip

Think 'CGL = Covers General Lawsuits' - it's the basic liability shield for most business lawsuit risks.

Why It Matters

Commercial general liability insurance protects your business assets and personal finances from potentially devastating lawsuit costs. Without it, a single accident or injury claim could result in legal fees and damages that bankrupt your business or force you to pay from personal assets.

Common Misconception

Business owners often believe that commercial general liability covers all business-related lawsuits, but it excludes professional errors, employment practices, cyber liability, and auto accidents. These risks require separate specialized coverage or endorsements.

In Practice

A small retail shop carries $2 million in CGL coverage with a $1,000 deductible. When a customer trips over merchandise and suffers injuries requiring $15,000 in medical treatment, then sues for $75,000 claiming negligence, the CGL policy covers the entire settlement plus $20,000 in legal defense costs. The business owner pays only the $1,000 deductible. Without this coverage, the owner would face $95,000 in total costs that could force the business to close.

Etymology

This standardized insurance form was developed in the 1980s by the Insurance Services Office (ISO) to replace multiple separate liability policies, with 'general' indicating broad coverage for typical business liability exposures.

Common Misspellings

comercial general liabilitycommercial general liabiltycommerical general liabilitycommercial general liablity

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Other insurance terms you should know

deductibleThe amount you pay out-of-pocket before your insurance begin…insurance premiumThe amount paid periodically to an insurance company in exch…deductibleThe amount a policyholder must pay out of pocket before insu…copayA fixed amount paid by an insured person at the time of a me…coinsuranceA cost-sharing arrangement where the insured pays a percenta…out-of-pocket maximumThe most an insured person will pay for covered healthcare s…