Commercial Liability Insurance
Commercial Liability Insurance
Commercial liability insurance—commonly known as Commercial General Liability (CGL) insurance—is a foundational protection for businesses, covering financial losses related to third-party claims of bodily injury, property damage, and personal or advertising injury that arise from business operations, products, or premises.^1^9
What is Commercial Liability Insurance
Commercial liability insurance is designed to shield businesses of all sizes from the substantial costs associated with legal claims and litigation. It protects business owners if their company is sued for causing harm to a third party due to non-professional negligent acts, faulty products, advertising errors, or incidents on their property. Policies typically exclude intentional harm, workers' compensation claims, and liability associated with automobiles, aircraft, and watercraft unless covered separately.^5^9
Core Coverage Areas
The standard CGL policy provides three primary protections:
Premises Liability: Covers accidents, injuries, or property damage occurring at the business location or through ongoing operations.^6
Products Liability: Protects against claims stemming from products a business manufactures, sells, or distributes.^8
Completed Operations: Covers liability for harm resulting from finished work or services performed.^6
Additionally, CGL policies commonly protect against:
Third-party bodily injuries (such as customer slips and falls).^7
Third-party property damage (damage caused to clients' property).^7
Personal and advertising injury (libel, slander, copyright infringement).^9
Legal defense costs, settlements, and court-awarded damages.^1
Medical payments for non-employees injured due to business operations.^8
Types of Liability Policies
There are two primary forms of commercial liability insurance:
Claims-Made Policy: Covers claims if both the incident and the claim occur during the policy period. Businesses can purchase "nose" and "tail" endorsements to extend coverage for acts before or after the policy period.^1
Occurrence Policy: Covers any incident that happens during the policy period, regardless of when the claim is filed—even after the policy ends.^7^1
Common Exclusions and Extensions
Most CGL policies exclude intentional injury, certain insured contracts, pollution, and professional errors. Risks such as liquor liability, cyber liability, or employment practices liability often require separate policies or endorsements.^6
Businesses facing higher risks can supplement their CGL policies with commercial umbrella insurance, which provides additional coverage above the standard policy limits and fills coverage gaps. Umbrella policies may have self-insured retention, similar to deductibles, before paying claims exceeding the base policy.^9
Why Businesses Need Commercial Liability Insurance
Without commercial liability insurance, businesses face severe financial and legal exposure from common risks: customer injuries, property damage, advertising errors, and product failures. Even limited liability structures such as LLCs do not guarantee complete personal protection from lawsuits.^5
Securing comprehensive liability coverage is essential for risk management, legal compliance, and financial stability for any business exposed to third-party claims.^9^7
Choosing the Right Policy
Business owners should consult with an insurance professional to:
Assess specific risks based on their industry, location, and operations.^6
Understand coverage limits, deductibles, and exclusions.^8
Select the right combination of CGL, endorsements, and additional policies (such as professional, cyber, or employment liability) to ensure robust protection.^1^6
Commercial liability insurance is a must-have safeguard for businesses in today’s litigious climate, helping protect assets, maintain operations, and build customer trust.^5^9
Call Pacific Insurance today: (801) 561-5550
Website: https://pacificinsuranceinc.com/
