What is Commercial General Liability Insurance in Construction?
Commercial General Liability (CGL) is like the first layer of armor for construction businesses, covering a wide range of risks you might face on the job site. It’s one of the most essential types of insurance contractors purchase, making sure they're protected from the common accidents and mishaps that come with running a construction project.
CGL covers three major categories of claims:
Bodily Injury: This covers physical harm or illness caused to someone else by your business operations. Think about an accident on the job site where a third party gets hurt—that’s where this coverage steps in.
Property Damage: If your business accidentally damages someone else's property—say, a subcontractor’s tool damages a client’s building—this coverage helps cover the costs of repairs or replacement.
Personal & Advertising Injury: This one’s a bit more abstract. It covers non-physical damage, like harming someone’s reputation or causing emotional distress through things like slander, libel, or copyright infringement. This can be critical if your business is involved in marketing or has a public-facing role.
Understanding the Policy Limits for General Liability Insurance
When you look at a Certificate of Insurance (COI), the coverage limits might not be exactly what you expect based on the categories above. There are six key limits listed under the General Liability section of a COI, each with a different role. Here’s the breakdown:
Each Occurrence: This is the maximum amount the insurance company will pay out for any single accident, whether it’s for bodily injury or property damage. It’s like the "per-accident" limit.
General Aggregate: This is the total amount your insurer will pay for all accidents or claims during the policy year. If you’ve got multiple incidents over a year, they all count toward this limit.
For example, imagine you have a policy with a general aggregate limit of $5 million. If you have three accidents—one costing $1 million, another costing $2 million, and the third costing $3 million—you’d reach the aggregate limit.
Damage to Rented Premises: This covers specific situations often left out of regular General Liability. One of those cases is fire damage. If a fire damages a rented workspace, this limit steps in. It also covers short-term rentals (under seven days), which usually aren’t covered under standard property policies.
Medical Expenses: This limit covers minor injuries to third parties, even if your business isn’t at fault. It’s a goodwill gesture to help cover immediate medical costs and avoid legal battles.
Personal & Advertising Injury: This limit applies when your business causes non-physical damage, like harm to someone’s reputation through slander or copyright infringement. These are the kinds of claims that can get tricky, so having coverage here is key.
Products Completed Operations: This applies to claims that arise after a project is finished, like if something goes wrong with the work you’ve completed and causes injury or damage later on.
Commercial General Liability Insurance is a must-have in construction to keep you covered across a wide range of risks. From job site accidents to reputation-damaging claims, it provides essential protection so you can focus on getting the job done safely and successfully!