Transferring Risk from Businesses to Insurance Companies

Commercial General Liability (CGL) is a form of property and casualty insurance that business should have to protect them against liability claims. It mitigates the risks and costs associated with a business being sued.  Instead of liability claims resulting in expensive and timely litigation, the risk is transferred to the insurance carrier that the policy is in place through.

Whether at fault for a claim or not, a business may still be held liable for damages that occur. The insurance carrier will cover the costs, up to the policy limit, that are associated with a claim made against a business having a Commercial General Liability policy.

A company’s exposure to a risk of liability can vary depending upon the different activities involved in conducting business.  Specifically, a general liability policy is recommended if your business:

• Visits clients
• Has clients visit them
• Owns or leases expensive equipment
• Works offsite.

Businesses are likely to face financial setbacks that are difficult to overcome without adequate coverage in place. Liability insurance could make the difference between having a successful and predictable business environment or an unpredictable one subjected to unforeseen expenses.

Liability claims for bodily injury, property damage, and personal injury are all covered under a standard commercial general liability policy with adequate coverage. These damages and injuries can occur:

• On premise
• During operations
• From a product
• After the completed operations of a product
• Or through advertising.

Advertising and personal injury can occur if another company feels as though it has been slandered  verbally, in writing, or while marketing and advertising . When paying out of pocket, even a false accusation against a business nearly always results in some form of negative financial consequences. A Commercial General Liability policy serves as protection for businesses against these associated costs by diverting law suit expenses to insurance claims.

Depending on the policy in place, an insurance claim through a Commercial General Liability policy can either be covered by occurrence or on a claims-made basis.  An occurrence policy handles injury or damage claims that occur while a policy is effective or in force, regardless of when the claim is submitted. A claims-made policy handles only claims that occur and are reported during the policy period. Typically, policies purchased on an occurrence basis have higher premiums than those purchased on a claims-made basis.

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