General liability or commercial liability covers a broad range of general liability exposures of a business.
Commercial general liability (CGL) is a type of insurance policy that provides coverage to a business for bodily injury, personal injury, and property damage caused by the business’ operations, products, or injury that occurs on the business’ premises. Commercial general liability is considered comprehensive business insurance, though it does not cover all risks a business may face.
Additional policies to cover certain liabilities, such as sexual harassment and discrimination—covered under employment practices liability, may be needed in addition to GCL policies.
Understanding Commercial General Liability (CGL)
Commercial general liability policies have different levels of coverage. A policy may include premises coverage, which protects the business from claims that occur at the business’ physical location during regular business operations. It may also include coverage for bodily injury and property damage that is the result of finished products. Excess liability coverage can be purchased in order to cover claims that exceed the limit of the CGL policy. Some commercial general liability policies may have exclusions to what actions are covered. For example, a policy may not cover the costs associated with a product recall.
When purchasing commercial general liability insurance, it is important for the business to differentiate between a claims-made policy and an occurrence policy. A claims-made policy provides coverage over a specific time period and covers claims made during that time period, even if the claim event occurred at a different time. An occurrence policy is different in that it covers claims provided that the claim event occurred during a specified time period and does not cover claims stemming from claim events that occurred before the policy came into effect.
In addition to commercial general liability policies, businesses may also purchase policies that provide coverage for other business risks. For example, the business may purchase employment practices liability coverage to protect itself from claims associated with sexual harassment, wrongful termination, and discrimination. It may also purchase insurance to cover errors and omissions made in financial reporting statements, as well as coverage for damages, resulting from the actions of its directors and officers.
Employment Practices Liability Insurance (EPLI)
Employment Practices Liability Insurance for employers covers employment-related liabilities other than on-the-job injuries. This may include legal fees and damages for suits such as wrongful termination, discrimination, sexual harassment, and other alleged violations of employees’ legal rights.
Directors and Officers Insurance (D&O)
D&O insurance covers directors and officers of a company for negligent acts or omissions and for misleading statements that result in lawsuits against the company. There are various types of D&O coverage such as corporate reimbursement coverage, personal liability, and entity coverage. D&O policies may be broadened to include coverage for employment practices liability as well.
Professional Liability Insurance (Errors & Omissions)
Professional liability insurance AKA Errors & Omissions (E&O) covers professionals for negligence and errors or omissions that injure their clients or cause damage to a third party’s data. This type of insurance is essential for licensed professionals such as accountants, attorneys, insurance agents, architects, engineers and technology companies. It is recommended that all professional and technology companies carry E&O coverage.