Commercial General Liability (CGL)
Also known as: CGL, GL, Commercial General Liability
CGL is functionally identical to General Liability — the terms are used interchangeably. Three coverage parts: A (Bodily Injury + Property Damage), B (Personal & Advertising Injury), C (Medical Payments).
Beyond the standard occurrence trigger, ISO also publishes a claims-made CGL on form CG 00 02, and Coverage A's business-risk exclusions — the (k) “damage to your product” and (l) “damage to your work” exclusions — push most construction-defect losses onto other policies.
Real-world scenario
Brightline Painting LLC, a 9-employee residential and light-commercial painting contractor in Columbus, Ohio, buys a Commercial General Liability policy with a per-occurrence limit of $1,000,000 and a $2,000,000 general aggregate limit. With roughly $640,000 in annual receipts and a modest claims history, their broker places the CGL for an annual premium of $4,850, billed as a $1,213 deposit plus three quarterly installments of about $1,212. The policy carries a $500 property-damage deductible and a $1,000,000 products-completed-operations aggregate.
Mid-year, a crew leaves a five-gallon bucket of primer uncapped on a client's hardwood stairwell overnight; it tips, and $18,400 of flooring plus $3,750 of an antique runner rug are ruined. The homeowner also claims $2,100 in cleaning and $1,600 in temporary relocation, bringing the direct damage to $25,850. Brightline reports the loss; the CGL responds under property damage. After the $500 deductible, the insurer pays $25,350 to settle the direct damage.
A month later the homeowner's attorney alleges the fumes aggravated a respiratory condition and demands $140,000. Because CGL includes a duty to defend, the carrier assigns counsel and spends $22,000 in legal fees investigating and negotiating, ultimately settling the bodily-injury claim for $60,000. Total insurer outlay reaches $107,350 against Brightline's $4,850 premium — well inside the $1,000,000 occurrence limit. Because defense costs are paid outside the limit on a standard CGL, only the $85,350 in indemnity payments erodes the aggregate, leaving $1,914,650 available for the remainder of the term.
How it affects your premium
CGL premiums are rated primarily on a business's exposure to third-party bodily injury and property damage. Underwriters weigh these drivers most heavily:
- Industry classification and hazard grade — a roofer or general contractor pays far more per revenue dollar than an accountant, because the exposure basis reflects real-world injury risk.
- Annual revenue or payroll — most policies rate on gross receipts or payroll, so a growing business owes more, often trued up at a premium audit after the term ends.
- Limits selected — moving from a $1M/$2M to a $2M/$4M structure, or adding a products-completed operations limit, raises the base rate.
- Claims history (loss runs) — prior frequency and severity directly load or credit the rate; a clean five-year history earns discounts.
- Deductible or self-insured retention — accepting a higher deductible lowers premium by shifting small losses back to the insured.
- Subcontractor use and contracts — heavy subcontracting, or contracts requiring additional insured status, increases the assumed liability and the price.
- Geography and venue — operating in plaintiff-friendly jurisdictions or catastrophe-prone regions pushes rates upward.
Common misconceptions
Myth: My CGL covers everything my business could get sued for.
Reality:
CGL is broad but not universal — it excludes professional errors, employee injuries, auto accidents, and cyber claims. Those need professional liability, workers' compensation, and other lines respectively.
Myth: The $1 million limit means the insurer will pay up to $1 million for all my claims this year.
Reality:
That figure is the per-occurrence limit for a single claim; the total the policy pays across the term is capped separately by the general aggregate limit.
Myth: Legal defense costs come straight out of my policy limit.
Reality:
Standard CGL pays defense costs in addition to the limit, though some policies use defense-inside-limits wording that erodes your coverage as legal bills mount — always check the form.
Frequently asked questions
What's the difference between CGL and a general liability policy?
They are the same coverage — CGL is simply the formal ISO name for what most owners call general liability. It protects against third-party bodily injury, property damage, and personal and advertising injury.
Is CGL the same as a Business Owners Policy?
No. A BOP bundles CGL together with commercial property coverage into one package, while a standalone CGL covers liability only.
Does CGL cover my employees if they get hurt on the job?
No — employee injuries fall under workers' compensation. CGL responds only to injuries suffered by third parties like customers or the public.
Is CGL written on an occurrence or claims-made basis?
Most CGL is written on an occurrence basis, meaning it covers incidents that happen during the policy period no matter when the claim is filed.
Can I add my client as an additional insured on my CGL?
Yes. Adding a client or landlord as an additional insured via endorsement is a common contract requirement and extends your policy's protection to them for liability arising from your work.
Sources cited
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