Commercial General Liability Protects Against Possible Perils

There are a great deal of potential problems when a business grows and becomes a larger concern with many employees and other support staff. A commercial general liability insurance plan can help protect commercial operations and their owners from liability against bodily injury to others, property damage and against injuries to caused by defamation, libel, slander or advertising.

Commercial general liability insurance plans also can indemnify a policyholder for costs arising from injuries occurring on the business premises or from its operations, such as if a piece of equipment comes loose while in transit and causes a vehicular accident resulting in injuries to others. A commercial liability insurance plan will pay up to policy limits for losses arising from covered perils, but additional coverages might be necessary.

In addition to commercial insurance plans, a firm might need excess liability insurance to protect against settlements exceeding the policy limits on their commercial liability insurance plans. An umbrella liability insurance plan is an type of excess liability insurance that can pay above what a commercial liability insurance plan would and very well could be the difference between going bankrupt and staying commercially viable.

While liability insurance provides a relatively broad range of coverage, it does have its limitations and exclusions. A common exclusion is one for work done that results in damages, such as if a construction firm builds a home which then partially collapses, causing damage to nearby vehicles. The vehicles might be covered, but the partially collapsed home would not due to the fact it was the result of the work done by the policyholder. If an insurance plan did indemnify in such a situation, that firm might wind up enabling the builder to profit from potential faulty workmanship or worse, potential fraud.

Another common exclusion among commercial general liability insurance plans is for losses arising from damage to a policyholder’s product. Insurance companies will not provide coverage for faulty work for the same reasons they will not provide coverage for work resulting in damages. The potential for fraud is too great, and if the workmanship was faulty from the start, then the likelihood of risk was too great for insurance coverage to apply. Once the product is in proper condition, then the insurance companies will initiate coverage.

Contractual liability is yet another common exclusion among commercial liability insurance plans. In general, coverage does not apply when there is a contractual obligation on the part of the policyholder to pay for property damages or injuries arising from contractual liability as stated in a legally binding contract. But even contractual liability has its exclusions.

Coverage might apply if there would have been a liability in place even without the contractual obligation, in which case the contract really has no effect on the level of protection needed. Another case in which a policyholder would be indemnified is if the contractual liability is defined as an insured contract and the loss occurs after the contract is completed. By Mike Heuer