CGL Insurance Coverage Misconceptions
Hopefully, if you own a business or are considering starting one, you understand the need for the right insurance.
There are many types of possible coverage that you could have, and what you need will largely depend on what kind of business you run. However, one coverage that applies to all businesses is a commercial general liability (CGL).
CGL helps protect your business against accidents and other negative incidents where you may be held financially responsible. This can include if someone slips and gets injured on your property, if you are accused of libel or slander, or even if you have had a data breach. Even the smallest of businesses must have CGL since companies can get sued at any time, even if they did nothing wrong.
However, CGL isn’t a catch basin for every misfortune that might happen that involves your business. It provides essential protection, but you will probably need other insurance as well. Here are some of the most common CGL insurance coverage misconceptions to understand where you are covered and where you might need additional protection.
It’s the Only Coverage You Need
The first misconception might be the most important. Unless your business operates under particular circumstances, CGL is not the only coverage you need. CGL covers you for accidents that cause bodily harm to clients and the general public. It can also protect you from the costs of property damage caused by your company or from accusations of slander and libel. You can also add coverage for data breaches to your policy. This means that your clients suffer damages if you have a data breach. As a result, you can get compensation to fight any lawsuits. It will also provide funding to invest in helping mitigate the public relations damage that you might suffer yourself.
Commercial general liability is geared towards situations where you might be held legally responsible for the damages and losses suffered by another person or entity. However, it will not protect you if those damages come from a car accident. Nor will it cover your commercial property against damage or vandalism.
Your Business is Too Small to Need General Liability Coverage
You might be thinking that there is no way your small business could ever cause someone bodily harm or be liable for their losses. However, this thinking is limited. There are ways that even the smallest of businesses could cause damage to another entity. Maybe you can’t think of them, but it is always possible. Plus, if you are a very small business, your ability to absorb legal costs is probably non-existent. If you are hit with a lawsuit, or someone makes a claim against you, your business will be in big trouble. Ensure that you are fully protected with commercial general liability no matter how small your business is. It can remove significant stress and worry from your life, knowing that your business is protected.
Commercial General Liability Includes Professional Liability Coverage
If you have a service-based business, then you need professional liability coverage. This protection is also known as errors & omissions coverage. For example, if you provide financial advice, there is a chance that your advice could lead to losses for a client. If that were to happen, they would hold you responsible and potentially take you to court. Professional liability coverage will provide compensation for your legal costs in this situation and help with any damages that might be awarded.
This differs from CGL because there is no physical injury or property damage involved. The client has taken your financial advice and acted upon it and suffered a loss. This is what PLC will cover. It would be best if you understood that professional liability covers errors you and your staff might make. Advice given in good faith with reasonable information will not make you liable. However, a miscalculation or if you didn’t provide adequate contextual information could put you in hot water.
CGL Will Cover Liability For Your Vehicles
If you or an employee gets into an accident with a company vehicle, you may be held liable for injuries and property damage. While this is a liability situation involving personal injury and property damage, it is not covered by your CGL policy. Cases involving commercial vehicles fall under a specific category. If you are operating under the assumption that you are covered for your vehicles, unfortunately, you are mistaken.
Ensure that you have separate coverage for any vehicles you operate for your business. This includes your personal vehicle. If you use it for business tasks such as transporting equipment or making deliveries, you are adding extra risk, and your individual policy will not cover it.
Your Home Policy Will Cover Liability for Your At-Home Business
One of the most significant risks that CGL covers is accidents that happen on business property or from business activities. Your home policy has the same coverage for people who visit your property. By this logic, you might think that your home policy will cover you if someone comes to your at-home business and is injured. Unfortunately, that is incorrect.
Your home policy will cover you for normal home-related activities and visitors. However, it will not protect you if someone is injured coming to your at-home business. It will also not protect against damage to their vehicle or personal items suffered on your property. The last thing you want is to think you are protected, only to find out that you aren’t at the worst possible time when you are facing a lawsuit.
You should never take for granted that your business is protected from liability. Even if your business did nothing wrong, a lawsuit can cause financial devastation just from your legal fees. Not to mention the stress that you will suffer worrying about your fate. If you are unsure about your coverage, then talk to your provider to ensure that you have adequate protection for your business. Never assume that your commercial general liability coverage is enough.