What is Commercial General Liability Insurance in India?

A Commercial General Liability (CGL) insurance policy is designed to protect businesses against any legal liability that involves paying compensation for damage or injuries incurred by a third party from your routine business operations. This unique policy offers financial protection to the companies against Public Liability and Product Liability claims. It is required for all the companies that involve manufacturing and developing of software and physical products for its clients and customers.

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*Premium varies on the basis of Occupancy, Business Activity & Coverage Type

CGL also protects the policyholder against any monetary loss resulting from legal matters in case of death, bodily injuries, property damage, and personal injuries caused due to your business operations within your premises. For instance, it includes Fell, Trip or Slip claim filed by a client who sustained injuries on your business premises and by falling/ tripping/slipping.

It is important to keep your premises in good shape and manufacture good quality products that are safe to use and consume. The major concerns are the security and safety of premises and product reliability. The laws are nowadays stringent to maintain third-party interest and amendments are also being made in this regard that companies need to adhere to.

A general liability insurance policy offers compensation for claims arising due to bodily injuries, and property damages or for which your business is accountable.

This coverage is provided to the Owners of a company, or managing directors, operations heads, etc. who are involved in the business operations. It also covers sellers, manufacturers, and distributors.

CGL policy is extendible to both industrial activities like construction, manufacturing, and non-industrial activities like offices, multiplexes, and hotels.

Understanding Comprehensive Commercial General Liability Insurance

Comprehensive General Liability Insurance (CGL) is a combination of Product Liability and Public Liability. It provides full protection against third-party liabilities. Public liability covers third parties' legal procedures for loss or damage incurred within the insured premises. Product liability offers protection against damages caused by the products that your company manufactures.

Basically, it is designed to recompense all the liabilities on behalf of the insured member. The insurance company shall pay off for third-party liabilities/ accidental death/ bodily injuries resulting due to:

  • You can get compensation for an accident that took place in the insured premises or any other premises where you run your business operations
  • It will also cover the operations, product and premises hazards
  • Medical expenses of the injured third-party as part of the public liability insurance cover
  • You can opt for additional covers by paying an additional amount of premium

Why Should You Buy Comprehensive General Liability Insurance?

It is imperative to have to buy commercial general liability insurance for anyone whose:

  • Business involves interaction with third-party sites
  • Business involves person to person interaction with the vendors, clients, and customers
  • Businesses that are based on contracts between two parties
  • Businesses that represent  their client’s business in any form

Some of the Hazards That May Lead to Financial Liability on a Company are as follows:

1. Third-party Property Damage/Bodily Injuries

If any injury is caused to a third person due to falling, slipping or getting electrocuted then you might be held responsible for the same. A Commercial General Liability (CGL) insurance policy will bear the cost of medical expenses on our behalf. And if the injuries lead to the death of a third person then compensation will be provided as per the court of law.

It also compensates for third-party property expenses such as replacement, repair, and renovation costs if any damage is caused to a third-party laptop, phone, or any other belongings ( apart from your employees).  It would also involve paying for the renovation of other building that is damaged due to an accidental fire on your premises.\

2. Advertising Infringement

 A CGL policy will be of great help in case you indulge in intentional or unintentional copyright infringement of some other brand or product’s tagline or logo. This may include slander and libel for indirectly causing harm to a third party's reputation. In such cases, the insurer shall compensate the settlement expenses, and legal expenses and will protect your business from closing down.

3. Product Quality Issues

It is always a priority for most manufacturers. And any claim is filed by a customer or client for the harm that is caused by using your product can land you in deep trouble. A CGL policy will protect your business from any such minor ignorance as well.

4. Invasion of Privacy

This involves intentional and unintentional invasion of a third party's privacy. For instance, if a celebrity is using your product and you commit the mistake of endorsing it without permission then also you would need commercial general liability insurance coverage. For claims arising due to the invasion of privacy, the insurer shall help you out with the out-of- the-court and legal settlement costs.

Additional Coverage is also Provided on Payment of Additional Premium:

Depending on your requirements you can opt for:

  • Extension for the Act of God Perils
  • Extension for Accidental and Sudden Pollution
  • Lift, Escalator and Elevator Liability Extension
  • Transportation Liability cover
  • Food and Beverages Liability Extension
  • Fire Damage Cover
  • Extension for Medical Expenses Cover
  • Advertising and Personal Injury extension
  • Limited Vendors Liability Cover

Why is it recommended to Have a Commercial General Liability Insurance Cover?

With CGL insurance, you can ensure seamless business operations and enjoy your peace of mind. And even a small disruption would mean a huge financial loss. So, here’s why you should have a commercial general liability insurance coverage if you own a business:

  • You don’t need to worry about third-party claims involving agitation, segregation, and discrimination
  • The insurer pays off medical expenses for claims arising due to mental injuries, physical injuries, humiliation, and shock
  • It would also reimburse advertising infringements such as trademark breaches etc.

You can easily buy commercial general liability insurance online. There are top insurance companies in India that offer CGL cover to a variety of business groups.

It is Quite Easy to Lodge Claim for Comprehensive General Liability Insurance Plans

So, the process is quick and hassle-free. All you need to do is furnish the required details, proofs, and documents along with a duly signed and filled claim form. The process may vary from one insurance provider to another and to check the details you can refer to your insurance company or refer to the policy documents.

Listed above are the features, benefits, and coverage under a commercial general liability insurance policy. But here’s a quick rundown of the limitations that follow:

Your claim would not be accepted under the following situations. However, this may also vary from one insurer to another:

  • Any kind of deliberate attempt or intentional Injuries caused to a third-party including clients, vendors, and customers are not covered
  • Usually, compensation is not provided for damages resulting due to the pollution
  • Contractual liabilities are not covered ( you can buy this as an add-on)
  • Work and employee-related perils would not draw any compensation
  • Claims lodged for war-related damages and injuries are not covered by any policy
  • Criminal acts and dishonest claims would also not draw any compensation in a commercial general liability insurance policy.

You must have understood by the now that purchasing a general liability insurance policy is a smart and wise decision for all the business owners. And before you zero down on a policy, it is suggested that you compare the plans first, do your preliminary research and get a policy that covers all the major concerns.

Written By: PolicyBazaar - Updated: 18 August 2022