Shuman Roy is an entrepreneur, business owner, and musician. He started RoysNoys, LLC in 2013 as a music production and education service company. He also offers small business consulting and advisory services to help businesses get from start-up mode to turn-key operations. Shuman earned his M.B.A from the Stern School of Business in 2001 and has an undergraduate degree from Manhattan College in ...

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Joel Ohman is the CEO of a private equity-backed digital media company. He is a CERTIFIED FINANCIAL PLANNER™, author, angel investor, and serial entrepreneur who loves creating new things, whether books or businesses. He has also previously served as the founder and resident CFP® of a national insurance agency, Real Time Health Quotes. He has an MBA from the University of South Florida. Joel...

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Reviewed by Joel Ohman
Founder, CFP®

UPDATED: Sep 21, 2021

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As you might expect, commercial insurance comes with more options than personal insurance because there are more risks associated with running a business than running your personal life. Business owners have to consider the health and wellbeing of their employees as well as product and other liability policies. No business is liability-proof, and it could cost you dearly if you don’t have the right coverage.

Each option is referred to as a “coverage part.” The coverage parts can be purchased mono line, meaning individually, or as part of a package policy, where at least two parts are combined.

What Is CGL?

Commercial General Liability, often referred to as CGL, is the liability coverage option for businesses both large and small. It’s a common part of liability insurance policies whether you’re concerned about medical expenses or something else.

A CGL will provide insurance for bodily injury and property damage you cause to others. As with other insurance policies, it is broken down into sections, in this case, parts A, B and C. As the name suggests, it’s designed to cover a broad range of claims.

Coverage part A of the CGL deals with bodily injury (BI) and property damage (PD) you cause to others.

This coverage is more expansive than a personal auto policy in that it insures the policyholder against BI and PD resulting from premises and operations, as well as products and completed operations.

Coverage Part B of the CGL insures against personal and advertising injury.

Personal injury is NOT insurance for BI and PD liability, rather the liability for financial damages that result from libel, slander, wrongful eviction or false arrest, or violating one’s right to privacy.

Advertising injury may result from making false claims about the effectiveness of a product or services.

Coverage C, medical payments to others, is designed as a no fault coverage that doesn’t deal with liability. This means no fault has to be proven in order to claim for damages.

Similar to medical payments on a homeowner’s policy, payments for medical services can be made to people other than the insured or employees.

Remember, employees are always covered by workers compensation insurance as long as they meet requirements. Depending on the industry and case, workers comp may require customary drug tests before paying out. Insurance companies may also limit the providers workers can go to and set other common limits and requirements.

In summary, CGL is just the liability portion of every commercial package policy (CPP). The right coverage limits can go a long way towards protecting your business interests with even a small liability claim.

The most common CPP is the Business Owner’s Policy (BOP), which incorporates the CGL with a type of business property and content coverage in a standardized policy designed for small businesses.

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Do you need insurance for your business operations?

Even if you’re a one-man operation selling your product on a local market, you should consider your insurance options. The larger you grow, the more your professional liability insurance and other policies should grow with you.

Contact your insurer or independent agent if you own a business and have specific coverage questions or are thinking about starting a business, and need assistance deciding what coverage will be necessary to be properly insured against all risks. They can advise you on the right coverage limits for your business and the types of insurance you may want.