Comprehensive General Liability Insurance
There may be some amount of confusion when looking for Comprehensive General Liability Insurance because most insurance companies no longer refer to this type of coverage by that name. The more recent name for this type of insurance is Commercial General Liability Insurance so if you are doing a search for comprehensive general liability you might want to try the newer terminology, commercial general liability. They are one and the same thing; it is only the name that differs.
What Comprehensive General Liability Insurance Covers
Basically, comprehensive liability coverage would pay monetary compensation to a person through an intentional or unintentional act by a business that result in loss to a person or a person’s property. It would also pay legal fees in defense of the business entity carrying the insurance. Comprehensive general liability insurance would most likely include the following areas unless otherwise excluded on the exclusions portion of the policy:
- Fire legal liability
- Products and completed operations liability
- Advertising and personal liability
- Medical payments
- Independent contractors
Although each of those areas are contained in the typical comprehensive general liability policy, the limits will vary from policy to policy. Also, even though each area has limits the comprehensive policy has what is referred to as an ‘aggregate limit’ which means the total limit of all claims against the policy in total. Once the aggregate limit is reached in any policy year, no more claims against the policy will be paid in that year.
Understanding Comprehensive Liability Coverages
Some of the terminology may be a bit obscure to the average layperson. For example, products and completed operations may be easily understood. If a product or a job that has been finished is defective and causes injury to a person or damage to property, then the injured party who sustains loss would have grounds to sue the commercial enterprise (manufacturer or contractor) for monetary compensation for that loss. However, advertising and personal liability may be a bit difficult to understand. If advertising a product or service can be directly attributed as being a cause of injury to person or property then there is grounds for a legal suit. This advertising could mean defamation of character or it could mean advertising a product or service that doesn’t do what it should and thereby caused injury directly or indirectly. Especially in regard to this area, comprehensive general liability insurance is of vital importance because of the legal fees it covers.
What Comprehensive General Liability Insurance Does Not Cover
Of course there is no reason for exclusion in some areas because it is common sense that this type of insurance will not cover certain things. For instance, if a worker is injured on the job then Worker’s Compensation would be the insurance to file against. Another area that will not be covered would be any liability that is the result of selling, manufacturing or the distribution of alcoholic beverages (liquor). Pollution is not covered nor are aircraft, watercraft or vehicles. Those vehicles have their own insurance products. If there has been a product recall the commercial entity is not responsible but rather the manufacturer. Comprehensive general liability will not insure personal liability for the directors or officers of the business and of course it will not cover professional (fiduciary) liability of persons.
Bear in mind that there are a number of factors that will affect premiums such as the number of suits filed against a company within a specified period as well as exposure to the potential for loss. The size of the company and the specific industry will impact cost so it is imperative that you get several quotes from a variety of insurance companies prior to choosing which company to buy insurance from. However, don’t let cost be the only deciding factor. Take the time to do a little digging to see whether or not those companies paid valid claims and are reputable within the industry. Once you have settled on a company you can choose which coverages to carry and which to exclude but in the end, Comprehensive General Liability Insurance is a must have for any business endeavor.