Commercial General Liability Insurance – Coverage for Any Business
As one of the most common types of liability insurance policies purchased in Canada the Commercial General Liability Insurance policy is an important piece of the insurance buying process. The Commercial General Liability policy referred to as CGL for short is intended to defend and indemnify a business facing a claim by a third-party alleging property damage or bodily injury resulting from an “occurrence.” Other additional coverages can include Personal Injury and Advertising Injury, Tenants Legal Liability and Medical Payments coverage.
The CGL policy in Canada is not uniform across all insurance companies as each insurer has their own wording. While there are some significant differences among the wordings most of the essential terms and conditions are very similar, if not identical.
Commercial General Liability Insurance policies are written on an “occurrence” based form which means that the event or occurrence that is the subject of the loss must have occurred during the policy period. In order to trigger coverage under the property damage and bodily injury section of the policy either property damage or a bodily injury must have occurred during the policy period caused by an occurrence (includes insureds negligence) which takes place in the coverage territory and for which the insured is legally obligated to pay compensatory damages.
The CGL policy includes a “per occurrence” limit as well as an “aggregate” limit. Per occurrence refers to the most the policy will pay for any one occurrence/incident. Aggregate refers to the total amount that the policy will pay out during the policy period or term. Most policies are written for a 12 month period. For example, if a company has a $1,000,000 per occurrence limit and $2,000,000 aggregate limit and is successfully sued for $1,500,000, the insurer will only pay $1,000,000 because the claim is $500,000 more than the per occurrence limit on the policy. This then reduces the aggregate limit from $2,000,000 down to $1,000,000 for the remainder of the policy period. The Commercial General Liability Insurance policy is not intended to provide coverage for claims arising from the rendering or failure to render professional services. The difference between the CGL policy and the Professional Liability policy is often misunderstood. In order to provide coverage for the professional services that a business provides a Professional Liability or Errors & Omissions Liability policy needs to be purchased.
In today’s litigious business environment where even small incidents can result in large lawsuits the Commercial General Liability policy is a very important component of the overall insurance buying process.
This article provides an overview of some of the key issues in relation to the Commercial General Liability Insurance policy although it is not intended to be a comprehensive analysis of this type of coverage. As mentioned in the article, the coverage can vary from policy to policy and as a result the policy wording should be reviewed carefully by a registered insurance broker to ensure that it meets the requirements of the insured business.
For more information please contact Ryan Mitchell at 416-862-5620 or rmitchell@mitchellsandham.com
