Commercial General Liability

Example

“The restaurant's commercial general liability insurance paid $250,000 when a customer slipped on a wet floor and suffered a back injury requiring surgery.”

Memory Tip

CGL = Covers General Lawsuits - it's the broad protection against common business liability claims.

Why It Matters

Without CGL coverage, a single lawsuit from a customer injury or property damage claim could bankrupt your business, as legal defense costs alone often exceed $50,000 even for frivolous claims. Most commercial leases, contracts, and business loans require CGL insurance, making it essential for business operations and growth.

Common Misconception

Many business owners think CGL covers all possible business liabilities, not realizing it excludes professional errors, employment practices, cyber liability, and auto-related claims. Others believe they don't need CGL for low-risk businesses, overlooking that even office-based businesses face slip-and-fall claims or property damage risks.

In Practice

A marketing consultancy with $1 million CGL coverage faces a lawsuit when a client claims their campaign caused $500,000 in lost sales. Even though the claim lacks merit, the insurance company provides legal defense (costing $75,000) and negotiates a $150,000 settlement. Without CGL, the business owner would pay $225,000 out-of-pocket, potentially forcing business closure.

Etymology

Evolved from basic business liability concepts in the late 19th century, with 'general' added to distinguish it from specific liability coverages, becoming standardized in modern form during the 1980s insurance reforms.

Common Misspellings

Related Terms

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