Business Liability Insurance

Commercial general liability insurance (CGL), protects your business from financial loss should you be sued because of property damage, injuries, or death caused by your negligence with respect to services, business operations, products or your employees. A typical example of commercial general liability insurance is slip, trip, and fall coverage, which protects your business against lawsuits because someone slipped, tripped, or fell in your workplace.

A  CGL insurance policy will usually cover the costs of your legal defence and will pay on your behalf all damages if you are found liable—up to the limits of your policy. CGL coverage is one of the most commonly sold insurance products, primarily because of the impact that a law suit can have on a business and because such liability suits happen so frequently.

The cost of commercial general liability coverage is based on the type of business you operate. Typically, the cost of a CGL policy is based on factors such as annual revenue or payroll. Internet or sales to the USA or other foreign countries can have an impact on the cost of your liability insurance.

Types of Commercial General Liability Insurance

Standard CGL coverage is divided into four primary groups:

• Bodily Injury / Property Damage
• Personal and Advertising Injury Liability
• Medical Payments
• Tenant Legal Liability

Let’s briefly consider how these work.

Bodily Injury / Property Damage Liability

Fundamentally, if your company, your product / service, your employees, or for that matter anything that is associated with your business cause physical harm to someone, or damages their property or belongings, the courts could find you legally liable. When a business is held legally liable, it is required to pay the injured party what is referred to ascompensatory damages.

Of course, there are limitations to this type of coverage.  For example, CGL would not cover the following if the:

• Courts apply against you or one of your employees a punitive damage claim, which is a judgement to pay money as a form of punishment
• Injuries or damage caused to another person or their property resulted from intentional acts
• Injuries or damage were caused by your commercial vehicle
• Damages are to property that you own, rent or otherwise occupy

Personal Injury Liability

Personal injury liability coverage (under a commercial general liability policy), protects your business, yourself, and your employees:

• Against lawsuits wherein it is claimed that what you or an employee said or did caused damage to the reputation and character of a third party

In contrast to bodily injury claims, personal injury claims arise from alleged damages caused to a third party that do not necessarily result in visible, physical harm. The most common types of personal injury claims are for:

• Libel (something printed about you that is untrue and damaging)
• Slander (something said about you verbally that is untrue and damaging)
• Malicious prosecution
• False arrest, detention or imprisonment
• Oral or written publication of material that violates a person’s right of privacy
• False arrest, detention or imprisonment
• Other actions that inflict emotional pain and suffering

As can be imagined, this type of claim can be caused by a wide range of incidents. The most common claimants are disgruntled former employees, dissatisfied customers and others who believe that they have been aggrieved by you, your company, or your employees.

What is not protected under the personal injury coverage? The primary exclusions relate to situations where a person:

• Publishes or says something about someone, or the product / service of their company, and which they know to be false.
• Assume liability as outlined in a contract
• Commits offences that are illegal, or are infractions of municipal ordinances or by-laws

Advertising Injury

The courts have commonly held that advertising injury relates to damages caused by slander, libel, privacy violations, copyright infringement, and disparagement of goods, products or services of other companies. As the title suggests, the injury arises when your company performs some form of advertising or marketing activity.

For example, you may inadvertently use on your website a picture that is copyright protected, and the copyright holder files a claim against you. Or, the content of one of your promotional ads or flyers is deemed to make disparaging remarks about a competitor’s product or service.

Should such a situation arise, your advertising injury liability coverage would protect your business and your assets.

Medical Expenses

This type of coverage is sometimes referred to as “Goodwill Protection” and is designed to pay for a third party’s minor medical expenses that arise from an accident on your company’s premises, or as a result of your company’s operations. This coverage can be applied in some cases as a way to avoid a costly lawsuit. For example, someone slips on a wet showroom floor, and breaks their leg. The medical expense coverage could cover the costs of their medical bills and their lost time from work, without the expense of going to court to resolve the issue.

Tenants’ Legal Liability

Accidents happen. And as a tenant if you cause property damage to the landlord’s property, you could be held legally responsible. For example, it could be a fire that results in smoke and water damage; or a flood caused by equipment you are using in your rented premises. When this occurs your Tenants’ liability coverage will defend you against any action to cover the costs to repair the damages. This coverage only applies to “property damage” to premises owned by others rented to you or occupied by you.

Also, although your landlord’s commercial general liability insurance will protect him/her, you still need insurance coverage to protect your business.

How can I prevent liability issues from arising? The most effective ways is to prevent liability-type losses from happening in the first place. This means identifying the types of risks associated with your premises and your products or services, and then reducing or eliminating the potential of them happening. Due diligence, along with good documentation where appropriate, is a very effective way to protect and/or defend your organization against a claim or lawsuit should one arise.

Also, if you are one of a number of tenants in a building, it is a good idea to ensure that your lease agreement clearly spells out each party’s responsibilities. For example, what areas are you responsible to maintain, inspect and repair?

In this regard, it is helpful to know a little about some of the criteria that the courts use to determine whether or not your business took appropriate steps to prevent an accident:

• Was the danger foreseeable?
• Did you or your employees conduct yourselves or work in accordance with acceptable standards of practice?
• Was there an adequate program of inspections based upon the risks involved? Were these inspections carried out?
• Did the risk/danger suddenly arise, or had it existed for a longer period of time?
• How difficult would it have been to prevent or remedy the risk?

Contact us today and we will work with you to find the best coverage that respects your budget.

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