Commercial General Liability (CGL) insurance policy provides comprehensive coverage to small business owners against personal bodily injury and property damagecaused to third party arising from the company's operations, goods or accidents on its insured property.
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Small businesses may face potential financial and operational liabilities in day-to-day operations due to several factors. They can be held liable for any injury to the customer on the business premises or as a result of the business activities.
Small businesses that manufacture, distribute, or sell products may face liability claims if their products are defective or cause harm to consumers. They may be responsible for damage to third-party property caused by their operations or products.
Accidents can take place anywhere and anytime, even if the best precautionary practices are in place. Small businesses can face liability-related issues such as compensating the injured party and apart from this, there are add-ons that provide coverage for defence costs if the affected third party decides to sue the insured party.
Consider a small business owner busy in daily business operations and one of the customers during the visit gets injured in the business premises. The customer got injured, and since the customer got injured on the business premises, he asked the owner of the premises to compensate him for the medical expenses. The business owner had Comprehensive General Liability Insurance and compensated the customer for the medical expenses.
Apart from this, there are several add-ons available for the policy buyer, such as defence costs, personal and advertising injury, etc., that can be purchased by paying an extra amount. Relating to the above-mentioned scenario and talking about these two add-ons, if the business owner had not provided compensation for the medical expenses and the customer filed a lawsuit against the insured business owner, then during the court procedure, he will get coverage for the lawyer's fee and court-related costs.
Here are two hypothetical examples to explain the role of CGL for small businesses:
Janice Ray owns a small artisanal bakery ‘Blissful Bites' which specialises in handmade pastries and cakes. She has invested her savings into the business and has built a loyal customer base in the local community. Shrija, a customer, placed a birthday cake order from Blissful Bites. Janice promised delivery, and on the delivery date, she handed the cake to one of her executives to deliver it to Shrija's address.
While on the way, the executive met with a minute accident, and the birthday cake was damaged. Enraged, Shrija refused a full refund and filed a legal claim on Janice's business.
The commercial general liability insurance policy with the defence cost add-on was active when this incident took place and Janice Ray got coverage for the lawyer's fee and other specified court related costs during the trial.
Avinash's shop deals in electrical supplies and devices. One day, Shom, a customer visiting the shop accidentally got electrocuted because of faulty earthing. Though the accident did not turn out to be life-threatening, Shom was enraged. Avinash and his workforce profusely pleaded and sought forgiveness for the incident.
After this, the insured party that is Avinash raised a claim and provided financial compensation for the injury caused due to electrocution caused in his shop's premises.
Conclusion
When running a small business, unforeseen and unplanned issues can derail all the efforts that have gone into building the business. Understanding that your public liability insurance policy offers coverage against unexpected problems fills you with hope and confidence against all odds. CGL enables you to concentrate on your business expansion plans without fretting about repercussions stemming from legal actions. We, at Policybazaar for Business, list a host of customised commercial general liability insurance from the top insurance providers to help you decide according to your requirements.
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