What CGL Insurance Doesn’t Cover

Commercial general liability insurance (aka CGL insurance) is essential for nearly all businesses. This is because this type of insurance can protect a business from a wide range of third-party liabilities or lawsuits.

One of the key questions regarding this policy is “what is excluded from CGL insurance?” 

While commercial general liability insurance is known for its broad coverage, it is important for business owners to be aware of where this scope of coverage ends. In this guide, we will talk about the limitations of CGL insurance and the other insurance solutions that take over for uncovered risks. 

Let’s get started!  

What is CGL Insurance? 

CGL insurance is a type of commercial insurance that provides coverage for bodily injury, property damage, and advertising/reputational damage concerning a third party.

Third-party individuals or entities can include members of the general public, clients, customers, suppliers, business partners, and so on. 

CGL insurance also provides coverage for medical, repair, and/or legal costs associated with the following scenarios: 

• Third-party bodily injury caused by business operations, within business premises, or because of a product sold/manufactured/built;
• Property damage caused by business operations or because of a product sold/manufactured/built; and
• Advertising/reputational damage like copyright infringement, invasion of privacy, slander, libel, and so on. 

What is Not Covered Under a Commercial General Liability Policy?

When a risk is not covered or excluded by CGL insurance, there are two main reasons why. It’s either because the risk is uninsurable or falls within another insurance type’s scope.

These are the risks that CGL insurance does not cover: 

1. Intentional Damage or Injury

CGL insurance covers a broad range of third-party injury or property damage. However, coverage for any of these is forfeited if the damage or injury is proven to have been caused deliberately. Intentional acts like these are simply not insurable. 

2. Physical Injury or Property Damage Because of Vehicular Accidents

Bodily injuries and/or property damage resulting from a vehicular collision are also excluded from CGL insurance policies. This is mainly because CGL is not designed to cover this type of risk. This applies even if the commercial vehicles are en route to carrying out business operations. 

The insurance solution to cover this type of risk is known as commercial auto insurance or fleet insurance. The former is meant for single commercial vehicles and the latter is for two or more commercial vehicles owned by one business. 

Commercial auto insurance and fleet insurance doesn’t only cover bodily injury and property damage resulting from the accident, but damage sustained by your commercial vehicles as well. To top it all off, this type of insurance also covers your commercial vehicles in the face of unforeseen events like theft, vandalism, fire, flood, etc.

3. Employee Injuries

We’ve discussed how CGL insurance covers third-party bodily injury. This means that employee injuries are not within its scope. The insurance type that covers employee injuries is workers’ compensation insurance.

Workers’ compensation insurance gives payouts in the event that employees are injured, made ill, disabled, or pass away because of an accident at work. 

4. Repairing or Refunding Faulty Products

CGL insurance covers bodily injuries and property damage caused by product defects and malfunctions. However, the coverage ends there. When it comes to repairing or refunding faulty products, CGL insurance does not give coverage. Product recall insurance is the closest type of insurance that can provide protection for claims related to faulty products.

5. Repairing Faulty Workmanship

Similar to the previous point, bodily injuries and property damage caused by faulty workmanship are also covered. However, only damaged properties will be covered, not the built structure or installation itself. 

For example, if a collapsed roof on a constructed garage damages a client’s property inside, the damaged property will be covered. However, reconstructing the garage or other similar expenses will not be covered. 

Professional liability insurance is the best type of insurance that can provide protection in case of negligence or errors that lead to faulty workmanship.

6. Personal Property Under the Insured’s Care, Custody, or Control

Personal property under the business’s care, custody, or control is not covered by CGL insurance. This encompasses leased or rented equipment. Though these technically count as third-party property, they are usually excluded from CGL insurance. 

The best type of insurance to cover damaged rented equipment is contractors’ equipment insurance. This type of insurance accounts for repairs and replacements when damage or loss is caused by a covered peril.

7. Incidents of Pollution

Though pollution can cause health problems for people within the vicinity, such claims are not within the scope of CGL insurance. The insurance solution for such cases is pollution liability insurance. 

This type of insurance covers cleanup costs and legal fees in sudden or gradual pollution cases. Mould and legionella are also covered by pollution liability insurance. 

Get a Customized Insurance Bundle to Protect Your Business 

That wraps up our guide on the common exclusions of CGL policies. As we’ve covered here, other types of insurance can take over where the scope of CGL insurance ends. So whether you want a stand-alone CGL insurance policy or a customized insurance bundle to protect your business, we’re here to help!

Contractors Insurance is a Toronto-based, award-winning firm specializing in personalized insurance for contractors, tradespeople, and professionals. We offer a completely hassle-free experience. Our dedicated team is here to assist you with all your insurance needs.

Take the first step today! Contact our friendly team or get started with a FREE quote!