10.0 Commercial General Liability Coverage
Learning Objectives
10.1 Legal Liability Exposures
Every business faces legal liability exposures that may result in financial loss if the business is held responsible for injury or damage to others. A Commercial General Liability (CGL) policy is designed to help protect businesses against many of these common liability risks. These exposures often arise from the business premises, the products the business makes or sells, its ongoing operations, and certain contractual obligations.
10.2 Commercial General Liability Coverage Forms
A Commercial General Liability (CGL) policy provides important coverage for many legal liability exposures faced by commercial risks. The CGL may be written as a stand-alone policy or included as a coverage part within a Commercial Package Policy (CPP). CGL coverage and other commercial liability coverages may be written using one of two coverage forms: an Occurrence Form or a Claims-Made Form. The form used determines how and when coverage is triggered under the policy.
10.3 Section I – Coverages
Coverage A – Bodily Injury and Property Damage Liability
10.4 Section II – Who Is An Insured
The Declarations page identifies the named insured under the Commercial General Liability (CGL) policy. Section II – Who Is An Insured then extends insured status to certain other persons or organizations, depending on how the named insured is listed on the Declarations page. The following persons or organizations are considered insureds, but only with respect to the conduct of the insured business:
10.5 Section III – Limits of Insurance
The limits of insurance shown on the Declarations page represent the most the insurer will pay under the policy. These limits apply regardless of the number of insureds, claims made, suits brought, or persons or organizations making claims or bringing suits. The policy limits apply separately to each consecutive annual period of the policy. This means that if the policy is written for more than one year, the limits apply separately to each annual policy period.
10.6 Section IV – Commercial General Liability Conditions
The Commercial General Liability Conditions apply in addition to the Common Policy Conditions found in a Commercial Package Policy (CPP). Together, these conditions explain the duties, rights, and responsibilities of the insured and the insurer under the policy.
10.7 Section V – Definitions
The CGL policy includes a separate Definitions section at the end of the coverage form. This section explains the meaning of important terms used throughout the policy. Many of these definitions are also common to other commercial liability policies, so understanding them helps learners interpret liability coverage forms more accurately.
Recap of Chapter Ten
Businesses face several liability exposures arising from their daily operations. Protection against many of these liability claims is commonly provided by a Commercial General Liability (CGL) policy. A premises exposure is the possibility that a business may be held legally liable for bodily injury or property damage that occurs at the insured’s place of business. An operations exposure is the possibility of liability arising from the insured’s work or business activities conducted away from the insured’s premises. A completed operations exposure begins after the insured has finished work or services at an off-premises job site and has left the location. This exposure involves possible liability for bodily injury or property damage caused by defective or improper workmanship. A products exposure begins after the insured has sold goods or merchandise and those products have left the insured’s premises and control. This exposure includes claims arising from defective products, inadequate instructions, or improper warnings.