-General Liability-

About Commercial General Liability

Commercial general liability covers the sum of money the insured is legally obligated to pay to others because of bodily injury or property damage caused by an occurrence.

Common Insurance Terms

Occurrence:  An accident, including continuous or repeated exposure the substantially the same general harmful conditions. 

Bodily Injurypays arising from bodily injuries caused to others by the policyholder’s action(s). 

Property Damage:  Physical injury or destruction of tangible property caused by either an individual who is not the owner of said property or by natural phenomenon. 

Personal injury or advertising injury:  Covers items such as false arrest, malicious prosecution, violation of privacy, libel slander, copyright infringement and wrongful eviction. 

Medical payments:  pays medical expenses to third parties for expenses incurred at the insureds premise or arising out of the insureds operations.  Medical expenses ae paid regardless of fault. 

Damages to premises rented to you (Fire Legal Liability):  Is the most paid for property damage to premises rented to or temporarily occupied by the insured with the owner’s permission if damage arises out of fire or explosion 

Products and Completed operations: Liability arising out of the insured’s products or business operations conducted away from the insured’s premises once those operations have been completed or abandoned.  Losses from faulty workmanship are not covered. 

Liability Limits

Per Occurrence AggregateThe most a policy will pay out for any one occurrence in the policy period (No matter how many claimants).  The recommended limit is $1,000,000 aggregate.  

General Aggregate: The total amount of coverage paid out in any one year.  Typically, this limit is double the per occurrence aggregate. 

Products/Completed Operations Aggregate: The total amount of coverage paid out for a loss resulting from products or completed operations.  Typically, this matches the general aggregate amount. 

Personal and advertising injury:   The limit for this coverage always matches the per occurrence limit of the liability.   

Damage to Premises Rented to you:  The most common limit for this coverage is $50,000, however, this can vary by carrier. 

Medical Expenses: The minimum limit offered is $5,000.  This may be increased depending on the carrier. 

Coverage Options

Liability Coverage Enhancements: Many carriers offer liability enhancement endorsements.  Coverages and limits vary by carrier and you should discuss this your agent.

Per Project Aggregate:  The per project aggregate extents the per occurrence limit of liability to apply separately to each construction project the insured has.  A “Per Project Aggregate” must be requested and there is an additional charge for this. 

Hired and non-owned:  Provides coverage for bodily injury and/or property damage caused by a vehicle you rent or borrow or caused by a non-owned vehicle such as an employees’ vehicle.

Additional insured clauses:  A type of status associated with the liability portion of the policy.  This provides coverage to other individuals/groups that were not initially named as a named insured on the policy.  Once added to the policy, the additional insured will then be protected under the named insurer’s policy and can file a claim if they are sued. 

Ongoing operations and completed operations: Under the General Liability policy with an additional insured clause coverage for ongoing operations ends when the job is completed.  The additional insured endorsement to include completed operations allows for coverage to continue for the completed operations insured after the job is complete. 

Primary Non-Contributory: This is term is often included in contractual agreements between 2 or more parties and stipulates how multiple policies will respond to a loss.  As an example, a contractor may require that his subcontractor’s policy be primary and non-contributory meaning that the sub-contactors’ policy would pay before any other policy and would not seek contribution from other policies that also claim they are primary.  Typically, you see this in the contracting industry however it can apply to other types of business.  

Waiver of Subrogation:  This is often required in contractual agreements and states that the insureds carrier cannot pursue a claim against another party in an attempt to recover money paid by the insurance carrier to the insured or to a third party in resolution of a covered claim.   A carrier must agree to this clause and endorse it onto the general liability coverage and must be in force prior to a claim being reported and/or filed.

General Liability policies are subject to audit.  If the policy is rated off payroll, sales or costs (normally subcontractors) the policy is subject to an audit.  The initial policy is based off anticipated or estimated payroll, sales and costs for the coming year.   This is called a deposit premium.  At year end the carrier will ask for the actual payroll, sales and costs are and the final premium will be based off this.  If the actual payroll, sales and costs are more than the estimated payroll this will result in an additional premium for the difference being billed to the business.  If the actual payroll, sales and costs are less than the estimated payroll a return premium will result.  The difference will be refunded to the business if it is above the minimum premium charged for that policy.  It is important not to under estimate payroll, sales or costs at the beginning of the policy term to avoid a large audit premium due at the end of the year.  If this occurs the carrier will adjust current payroll to match that of the audit and now the business is subject two large additional premiums one for the audit itself, and one for the current term.

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