Published November 12, 2020 • 3 minute read
ABCs of CGL Coverage
There are three groups of CGL policies aptly referred to as Coverage A, B, and C in the insurance world.
Here's a brief breakdown:
Coverage A: Bodily Injury & Property Damage
Bodily injury typically includes bodily harm, sickness, or disease, including incidents resulting in death.
Example: A painter is working on a building and falls off his ladder, resulting in a bodily injury claim.
Property damage, as it pertains to general liability, is defined by the educational service International Risk Management Institute (IRMI) as “physical injury to tangible property including resulting loss of use and loss of use of tangible property that has not been physically injured.”
Example: A painter's ladder falls over and shatters a window, resulting in a property damage claim.
Coverage B: Advertising & Personal Injury
Under general liability, combined in standard CGL policies, advertising and personal injury constitutes a category of insurable offenses that produce harm other than bodily injury.
Examples of claims covered under advertising and personal injury liability include false arrest, detention, or imprisonment; malicious prosecution; wrongful eviction; slander; libel; invasion of privacy; copyright infringement; and misappropriation of advertising ideas.
Coverage C: Medical Payments Coverage
Medical payments coverage is a type of liability coverage that ensures medical or funeral expenses be allocated to an injured party, regardless of liability, in the event of bodily injury or death sustained by accident under the conditions specified within the policy.
Note: Other types of liability policies you may consider are liquor liability, directors and officers liability, and/or pollution liability. An insurance professional can help you determine endorsements that are right for your unique business.
Types of CGL Coverage
An occurrence policy protects a business from any covered incident that happens during the policy period, regardless of when a claim arises. This type of insurance will cover a business even if the claim comes in after the policy is canceled, as long as the incident occurred within the time frame dictated by the initial policy.
A claims-made policy provides coverage for claims that occur and are reported within the specified period set forth by the terms and conditions. This means that if the policy is canceled or the premium isn't paid, those that come through will not be covered, even if the incident occurred when the policy was active.
Difference Between Professional & General Liability
As aforementioned, general liability involves non-professional negligence. Instances of professional negligence are covered under professional liability policies.
Professional negligence is most applicable within industries with codes of conduct or standards used to judge your services.
As a rule of thumb: General liability insurance typically covers physical damage to your business, whereas professional liability insurance, also called errors and omissions (E & O) insurance, more often concerns libel, slander, misrepresentation, negligence, and inaccurate advice.
Depending on the nature of your business, an insurance broker may advise you to purchase both general and professional liability policies. If you decide to use two different carriers and a claim is made against your business, one insurance company may try to foist the responsibility of the payout onto the other. To avoid this competition and encourage focusing on the problem at hand, purchase both from the same insurance carrier.
Let BCS Help
Ensuring your contractors hold the right policies and endorsements can shield your company from unnecessary exposures. BCS's full-service solution will collect, review, and correct your documents to ensure compliance and provide a high standard of third-party liability risk mitigation, while the self-service option provides the software platform to help your team maintain documentation in-house. Schedule a demo to learn more.