Commercial general liability insurance is an insurance policy that protects businesses and other organizations against liability claims for bodily injury (BI) and property damage (PD). Claims usually arise from the businesses’ premises operations, products and completed operations. Limits also exist to cover advertising and personal injury liability.
What you need to know about Commercial General Liability Insurance:
Other than personal and advertising injury, the commercial general liability policy is only designed to cover claims resulting from two things: bodily injury and property damage. If neither of those circumstances arise, you can assume that an unendorsed general liability policy will not respond.
An unendorsed commercial general liability policy excludes numerous coverages that can be purchased as stand-alone policies. A company’s professional liability or errors and omissions exposure will be excluded by a general liability policy. Architects, engineers, attorneys and CPA’s must all look beyond the general liability policy for coverage. Similarly, a company’s pollution exposure will not be covered by an unendorsed general liability policy.
Depending on the business of the insured, an underwriter can and will attached certain endorsements or provisions to a general liability policy to direct the insured’s actions. For example, if an electrical contractor occasionally uses subcontractors, the underwriter may attach a “subcontractor warranty” to the insured’s liability policy. This mandates that any subcontractor must carry their own insurance in limits equaling at least what is provided on the electrical contractor’s policy.
Two of the most confusing exclusions on a commercial general liability policy are the exclusions for damage to “your product” and to “your work”. The general liability policy does not guarantee your product; it pays for resulting damage caused by a defective product. Likewise, the policy is not designed to be a warranty of your work; it does pay for the resulting damage of your faulty work.