Liability Insurance: Defense Against Legal Liability

The only way to effectively protect your business assets is to carry adequate commercial general liability (CGL) insurance coverage. CGL protects your business from damages caused by bodily injury or property damage for which your business is found to be legally liable.

What Does CGL Cover?

A typical CGL policy provides coverage for claims of bodily injury, personal injury (libel or slander), advertising injury and property damage caused by your business operations or products or that occur on your business premises.  It can be offered as a standalone policy or can be packaged with other coverages such as property, crime, automobile and more. A CGL policy enables you to continue your normal operations while dealing with real or fraudulent claims of negligence or wrongdoing. CGL policies also cover the cost to defend and settle claims. A typical CGL policy may include the following coverages:

  • Automatic Additional Insured: Coverage is provided for written contracts, agreements, and permits.
  • Personal and Advertising Injury: Protects against claims of libel, slander, disparagement, or copyright infringement in advertisements.
  • Defense Costs: Provides coverage for legal expenses incurred in defending claims brought against your business, regardless of who is at fault.
  • Medical Expenses: Provides coverage for medical expenses if someone is injured on your premises or by your products.
  • Premises and Operations Liability: Provides coverage for bodily injury and property damage sustained by others on your premises or as a result of your business operations.
  • Products Liability: Provides coverage for bodily injury and property damage sustained by others caused by your products.

How Much Liability Insurance Coverage Does Your Business Need?

The amount of general liability insurance coverage that your business needs depends on three factors: perceived risk, where you operate your business and the type of products you manufacture.

  • Perceived Risk: Consider the amount of risk associated with your business operations and functions. For example, are you engaged in an industry or profession that is susceptible to lawsuits? Or are you engaged in a dangerous activity? If so, you might want more coverage.
  • Premises and Operations Liability: If you operate in a state that has a reputation for awarding high damages in tort litigation, then you may wish to purchase higher limits of liability.
  • Type of Product Manufactured: If you manufacture a dangerous product, you may want to carry higher limits of liability. For instance, if you manufacture heavy machinery, you will generally need more coverage than if you manufacture stuffed animals.

In addition, you can purchase an Umbrella Liability policy to provide greater protection.

Other Ways to Protect Your Business

While a CGL policy is a necessity, there are other ways to protect your business from liability.

  • Establish a high standard for product quality control.
  • Keep all company records up to date and accurate.
  • Train your employees thoroughly and properly.
  • Ask RMC Group for safety and compliance information.

RMC Group understands that your business needs to be protected, and we are here to help. Please contact us today to learn more about our risk management and insurance solutions at 239-298-8210 or [email protected].


This Coverage Insights is not intended to be a complete discussion of the subject, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice. © 2011 Zywave, Inc. All rights reserved.