Every business needs commercial general liability (CGL) insurance. It’s there to protect you when your business might make mistakes that inadvertently cause harm to a third party (e.g., a customer, vendor or member of the public).
Still, many business owners don’t fully understand the ins and outs of a CGL policy. Let’s consider three common misconceptions about this coverage, and why you shouldn’t treat them as fact.
Myth 1: BOPs Offer All the Coverage You Need
Many small business owners get their critical coverage through a business owners policy (BOP). The BOP contains numerous essential commercial insurance benefits in one place, including liability coverage.
However, BOPs only offer CGL insurance as a baseline of coverage. Therefore, to assume that your BOP contains all the liability coverage you need is incorrect. Often, you will need to expand upon the coverage within a BOP to ensure proper protection for your business’s specific liability exposures.
Myth 2: CGL Benefits Cover All Commercial Liabilities
A CGL policy is not all-encompassing. It generally only covers common liabilities—such as bodily injuries and property damage—that might occur in any business. It typically does not cover more specific risks, like cyber liabilities, directors & officers (D&O) liabilities or industry-specific exposures.
Furthermore, neither employee liabilities nor the business’s own property will be covered by this benefit. However, coverage for these exposures is available separately.
Myth 3: Your Small Business Doesn’t Have Enough Liabilities to Need Coverage
Some small business owners mistakenly think that they don’t have to buy CGL coverage because they don’t pose enough of a risk to third parties to merit buying coverage. This is categorically incorrect.
The bottom line is that you never know when someone might experience a property loss or bodily injury due to your business’s actions. When they do, their losses could be substantial, and if they blame your business, then you might have to compensate them. This financial blow alone could be significant, and if it arises as part of a lawsuit by the affected party, the related expenses could be even more severe.
Therefore, work with your insurance agent to learn what your CGL benefits cover on a base level. Afterwards, the agent can help you determine precisely where your additional coverage needs lie, and what you need to do to increase your benefits.