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All About Commercial General Liability Insurance: What is it, What’s Covered, and What’s Not?

PROLINK Blog

All About Commercial General Liability Insurance: What is it, What’s Covered, and What’s Not?

November 5, 2020

What is Commercial General Liability Insurance?
What does CGL Insurance Cover?
What’s not covered under CGL?
Who needs CGL Insurance?
Why do you need CGL Insurance?
How is CGL different from Professional Liability?

Disclaimer: Please note that the information provided herein offers guidelines only. It is not exhaustive nor will it apply to all policies, individuals, situations, or circumstances. The specific terms of your policy will always apply.

graphic of a person slipping in an office to show when companies need commercial general liability insurance

What is Commercial General Liability Insurance?
What does CGL Insurance Cover?
What’s not covered under CGL?
Who needs CGL Insurance?
Why do you need CGL Insurance?
How is CGL different from Professional Liability?

Disclaimer: Please note that the information provided herein offers guidelines only. It is not exhaustive nor will it apply to all policies, individuals, situations, or circumstances. The specific terms of your policy will always apply.

graphic of a person slipping in an office to show when companies need commercial general liability insurance

Running a company is no easy feat. It takes hard work, focus, and a lot of planning. But no matter how carefully you plan, business is unpredictable. And if your products, services, or staff cause harm to a client, visitor, or other third-party, you could find yourself in the middle of an expensive lawsuit. Anything from malfunctioning equipment to inadequate safety labels to even a simple slip-and-fall can leave you liable for thousands out-of-pocket.

That’s where Commercial General Liability Insurance comes in. Read on to learn more about what it is, what’s covered, and what’s not.

What is Commercial General Liability Insurance?

Commercial General Liability Insurance (CGL), also known as general liability insurance, protects your business when it’s sued by a third-party for bodily injury, property damage, or reputational harm caused by your professional activities or employee operations. That includes any products you sell or services you provide on your premises and anywhere else you and your staff conduct business, like a client’s office, worksite, or home.

In the event of a claim, CGL will cover your legal fees, court-awarded damages, out-of-court settlements, and more.

What does Commercial General Liability Insurance Cover?

CGL policies generally include coverage for:

  • Bodily Injury: Any physical injury, sickness or disease, including death, that results from your business operations. For example, if a customer slips outside your office and breaks their hip, a bodily injury claim would cover expenses related to medical bills, pain and suffering, and lost wages.
  • Property Damage: Any damage to a third-party’s property (including belongings) caused by your business’s actions or inaction. For example, if you scratch the floor or knock over an expensive vase during a meeting at your client’s home, your CGL insurance will apply.
  • Personal and Advertising Injury: Allegations of libel, slander, defamation, false advertising, violations of privacy, copyright infringement, and other types of reputational harm.
  • Medical Payments: Coverage for medical expenses for minor injuries suffered by a third-party from an accident at your company premises or due to your company operations—even if you’re not held legally responsible for the accident.
  • Products Liability: Bodily injury or property damage that is caused by a faulty or defective product you sell or supply, like sunglasses that fail to protect the eyes from UV rays or a toy for small children that doesn’t have a choking hazard warning.
  • Tenant’s Legal Liability: Pays compensatory damages to your landlord if the commercial property you rent or lease is damaged or destroyed and you are found at-fault.
  • Legal Costs: Covers your expenses from being sued, fighting the claims in court, and any settlements from the suit, subject to your policy limits.
  • Employer’s Liability: Optional coverage for injured employees in case your business does not require Workers’ Compensation.
  • Non-Owned Automobile Coverage: Provides liability protection when an employee occasionally has to drive a personal vehicle, whether owned or rented, for business purposes.
  • And more.

Disclaimer: The above descriptions are only a brief summary of the main sections that are part of a standard CGL package. For more information, please consult your policy or confirm with a licensed insurance-representative.

What’s not covered under CGL?

  • Professional Services: CGL won’t cover you for any third-party financial losses stemming from professional advice given by your business. For these types of claims, you’ll need Professional Liability Insurance.
  • Expected or Intended Injury: Your policy won’t apply if your business deliberately caused harm to a third-party, or failed to act despite knowing that injury or damage was certain to result from your operations.
  • Uninsured Business Operations: Remember to keep your insurance provider informed whenever you make a change to your business operations. If you add new services without updating your coverage, your CGL policy won’t kick in for any related instances of injury or damage.
  • Your Business Property: Theft or physical damage to your premises and associated repairs or replacement costs for contents, equipment, and furnishings will only be covered by Property Insurance.
  • Commercial Vehicles: Damage to a commercial vehicle or fleet, a group of vehicles used for business purposes, requires a separate Commercial Auto policy.
  • Data Security: Expenses from privacy breaches, cyberattacks, and any other unauthorized loss, theft, or use of data are covered by Data Security & Privacy Breach insurance. Watch our cyber insurance video to learn more.
  • Employee Injuries: Any work-related employee injuries or illnesses are addressed by Workers’ Compensation and other employment laws.
  • Business Crime: Standard CGL policies exclude workplace fraud, embezzlement, and other criminal actions committed by dishonest employees, executives, and vendors, which are tackled through Crime Insurance.

Who needs Commercial General Liability Insurance?

Any business that comes into contact with a third-party, including clients, vendors, suppliers, other businesses, and more needs Commercial General Liability Insurance, especially if you or your staff:

  • Own, rent, or lease a commercial space that’s open to the public (e.g. an office, a factory, or a studio);
  • Have a home-based practice and clients visit you at home;
  • Visit your client’s workspace or home, or conduct business anywhere else offsite;
  • Handle client property;
  • Advertise or create marketing materials for your business;
  • You sell any physical goods or perform any physical service.

Why do you need Commercial General Liability Insurance?

Although CGL isn’t legally required for most industries, it’s still a critical protection because it covers risks that all businesses face regardless of size or trade. Whether it’s large or small, brick-and-mortar or online, family-run or a solo operation, you could be liable if any kind of damage or injury to a client, visitor, or other third-party is traced back to your company.

And lawsuits aren’t just time-consuming—they’re costly. Bodily injury claims in particular are pricey to defend, with settlements easily exceeding upwards of $1 million. If you don’t have money already set aside, prolonged litigation and punitive damages can put a squeeze on your wallet and might even eat into your personal assets.

Here are just a few examples of everyday situations that your business could be held responsible for:

  • A client is visiting your office or perusing through your store, trips on loose flooring, and breaks their leg.
  • Construction workers accidentally damage the building next door to yours during renovations.
  • A mirror sold by your business fell on a client’s foot.
  • A leaky toilet in your office trickles down to the next floor and damages the business beneath yours.

The truth is: accidents happen—but your business shouldn’t have to pay the price. A comprehensive Commercial General Liability plan can shield you from the financial burden of incidents that may be outside of your control.

How’s it different from Professional Liability Insurance?

Professional Liability Insurance defends you against allegations of errors, omissions, or negligence committed within the scope of your profession. While a client may not have been harmed physically, they might have lost out financially. In contrast, CGL covers non-professional negligent acts or liabilities—acts that aren’t necessarily caused by your professional advice or expert services. That means CGL claims might not even be directly related to your work or the work you produce, but occur as a result of your business operations.

Both coverages are equally as important. Because they respond to different exposures, both policies work together to reduce the chances of a gap in coverage and protect you comprehensively from any claims that fall into a grey area.

In fact, both Professional Liability Insurance and Commercial General Liability Insurance are so crucial that some providers even bundle them together for your convenience, though you should check with your broker first just to be sure.

As a Business Owner—as an entrepreneur—you might be used to taking risks. But foregoing Commercial General Liability Insurance is one you shouldn’t even consider. Let’s say your company manages to avoid any injuries, accidents, or other unfortunate events. What happens if you’re sued for something you didn’t do? How would your business fare? Or your bottom line? Or worst of all, your reputation? Would you really be able to weather the storm without insurance?

That’s where we come in. With access to a network of over 35 insurers, PROLINK can help you find a comprehensive CGL policy that will cast a wide net of protection over any risks that might come up during your normal business operations.

Connect with PROLINK today to learn more!


PROLINK’s blog posts are general in nature. They do not take into account your personal objectives or financial situation and are not a substitute for professional advice. The specific terms of your policy will always apply. We bear no responsibility for the accuracy, legality, or timeliness of any external content.

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