Commercial General Liability

International Risk Management Institute (IRM) describes CGL as under:

A standard insurance policy issued to business organizations to protect them against liability claims for bodily injury (BI) and property damage (PD) arising out of premises, operations, products, and completed operations; and advertising and personal injury (PI) liability.

Broad contours are as follows:

Premises Liability: arising out of an organization’s premises (whether owned, rented, or occupied);

Operations Liability: arising out of an organization’s ongoing or current operations or work (in a plant, at a jobsite, etc);

Products Liability: arising out of products made, sold, or distributed by an organization which have been relinquished to the party who is alleging injury or damage;

Completed Operations Liability: arising from work (other than products) that an organization has finished and/or has been accepted or put to its intended use by a customer.

CGL policy includes two other hazards for harm done to others –

Personal & Advertising Injury:

Besides the primary coverage, CGL policy also provides for some supplementary benefits like tenant’s liability for damage by fire to the rented premises and primary medical expenses. Generally, these supplementary benefits are offered in addition to the limit of indemnity of the policy. There are also not subject to a deductible.

The duty-to-defend clause obligates the insurer to take over the defense of any claim brought by a third party against the insured on a claim that falls within the policy’s coverage. It is sufficient if insured establishes that there is potential for coverage under the policy to give rise to the insurer’s duty to defend without regard to the ultimate decision in the claim. Duty to defend obligates insurer to take over the defence even if the claim is groundless, false or fraudulent. Even though the claim lacks merit, the insurer still has an obligation to defend the claim.

It is possible to issue CGL policy on occurrence basis. Occurrence policy protects from any covered incident that “occurs” during the policy period, regardless of when a claim is filed. An occurrence policy will respond to claims that come in – even after the policy has been cancelled – so long as the incident occurred during the period in which coverage was in force.

CGL policy affords protection against liability claims for bodily injury (BI) and property damage (PD) arising out of premises, operations, products, and completed operations. The policy provides indemnity in respect of:

• Legal costs in defending proceedings.
• Any damages awarded to the claimants including out of court settlements

As in the case of other insurance policies, CGL policy also has extensions and exclusions which need to be clearly understood before the commencement of cover so as to avoid contract unpredictability.

(The information contained and ideas expressed herein represent only a general overview of subject covered. It is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Insurance buyers should consult their insurance and legal advisers regarding specific coverage and/or legal issues)