Wondering about the basics to Commercial General Liability Insurance? Here's an explainer from Axis.
This article will cover the four major coverage areas, from A to D, as well as the auto component.
What Commercial General Liability means broadly is that the insurance company will pay for damages and legal costs related to third party claims of bodily injury, property damage, or personal and advertising injury arising out of your activities. The policy also extends to medical expenses and automobiles rented or borrowed by the organization. The policy will pay for damages as well as legal fees related to defending lawsuits for damages.
What does third party mean? Third party refers to an individual or organization who is not an employee of the insured small business.
Commercial General Liability Coverage A: Bodily Injury and Property Damage
Bodily Injury means:
Physical injury, sickness, or disease sustained by a person, including death. The definition also includes mental anguish or mental injury resulting from a physical injury. Most bodily injury claims happen due to slips, falls or injuries at the organizations premises or events.
Property Damage means:
Physical injury to tangible property including loss of use and theft. These claims can occur from negligence or accusations of theft, including negligence where an activity damages the property or assets of another.
Commercial General Liability Coverage B: Personal and Advertising Injury
This means injury arising from a variety of factors including:
a) Libel or slander which disparages a person or organization
b) Oral or written publication which violates a person’s right of privacy
c) Use of another’s advertising idea in your advertisementor copyright infringement in your advertisement. Advertisement means a notice or broadcast published to the general public which could mean material disseminated electronically or traditionally.
Personal and Advertising Injury coverage is excluded for organizations whose business is:
a) Advertising, broadcasting, publishing or telecasting
b) Designing or determining content of web-sites for others
c) Internet search, access, content, or service providers
As a result, oganizations whose business fits this criteria, or who have significant operations in these areas should purchase a Media Liability insurance policy.
Commercial General Liability Coverage C: Medical Expenses
The insurance company will pay for medical expenses related to an accident or injury on your premises, on the way to your premises, or because of your operations. These expenses are typically first on the scene responses but can be incurred up to one year after the accident and include:
a) First aid administered at the time of the accident
b) Necessary medical, surgical, x-ray and dental services including prosthetic devices
c) Necessary ambulance, hospital, professional nursing and funeral services.
Medical expenses will be paid without any fault established.
Coverage D: Tenants Legal Liability
The insurance company will pay for damages (or defense costs) to the property damages of premises of others rented to you or occupied by you. This might be the space you lease or a rented event venue. Sometimes damages are caused by negligence such as a leaking cooler damaging floors. The damage has to be caused in Canada and during the policy period.
Non-Owned Automobile Insurance
Non-owned & hired auto liability covers bodily injury and property damage caused by a vehicle you hire (including rented or borrowed vehicles). Often small businesses rely on employee or volunteer’s personal cars for transportation which is the key point of this coverage. Many auto insurance policies won’t pay for claims related to business activity.
Occurrence Limit vs Aggregate Limit
The occurrence limit is the most the insurance company will pay for one single claimed incident. The aggregate limit is how much they will pay over the course of the policy term. This means a small business could have multiple claims throughout one year which each individually will be limited by the occurrence limit, and over the course of the year added together can’t exceed the aggregate.