From inventory and bookkeeping to pricing and personnel, business owners of all sizes are confronted with the need to make decisions from day one. While all of these decisions are important to the long-term success of an operation, it goes without saying that some are clearly more significant than others.
Indeed, outside of choosing a legal structure for the organization, one of the most important decisions facing business owners will make is the insurance coverage they select to protect them from potentially devastating losses.
One level of coverage that many business owners can — and likely should — opt to purchase at the outset of opening their doors is a commercial general liability insurance policy.
For those unfamiliar with CGL policies, they are designed to protect a business against any losses relating to personal injuries, property damage or advertising injuries caused by their operations, services or employees, and for which they are otherwise liable.
In other words, they protect businesses against liability arising from non-professional negligent acts.
Regarding personal injuries and property damage, consider scenarios where a customer is injured in a slip-and-fall accident in an area store or a customer’s home is damaged by an employee’s failure to operate machinery correctly.
In both these scenarios, a CGL policy would cover not just the ensuing legal defense costs, but also the damages (up to the policy limits) if the business is found liable.
Regarding advertising injuries, consider scenarios in which a competitor alleges that a business has made libelous statements in its advertisements or otherwise infringed upon a copyright.
In this scenario, a CGL policy would similarly cover legal defense costs and damages (up to the policy limits) if the business is found liable.
As a final note, it’s important to understand that a CGL policy also provides limited coverage for reasonable and necessary medical payments for injuries sustained by non-employees and for which the business is otherwise liable, but which doesn’t result in litigation. This typically arises in those scenarios in which the medical claims are relatively small and, as such, can be settled promptly.
We’ll continue discussing CGL policies in our next post, exploring what options policyholders have when an insurer fails to fulfill their obligations.
If you have questions or concerns relating to CGL policies or other important insurance law matters, consider speaking with an experienced legal professional as soon as possible.Share