Premises and Operations Coverage (CGL, Coverage A)
Specifically, this is a bodily injury (BI) and property damage (PD) coverage in part A of the CGL.
Products and completed operations is the other coverage in part A of the CGL, not discussed in this article.
Premises and operations coverage insures a policyholder specifically against BI and PD claims for damages resulting from negligence associated with owning property and the day-to-day operations necessary to conduct business.
This coverage is not extended to you or your employees. Employees are covered by workers compensation insurance. The limits are strictly for the property that is owned and what happens on the premise. The owner is generally covered under a different portion.
Let’s look at an example of each.
What is premises coverage?
Imagine you own a clothing store at a fixed location. As the owner, you are liable for both injury and property damage suffered on the premises as a result of your negligence should an accident occur.
Perhaps the parking lot is icy and someone slips and falls as a result. It is your duty to maintain a safe shopping environment. Because of this, someone becomes injured on the premises of your business, and you’re now involved, no matter the cost.
Therefore, you would be responsible for covering the cost of the resulting injuries. Your insurance company would be responsible for paying the medical bills of that person should they be seriously injured. Even if it’s the parking lot, that is generally considered to be part of the premises of what you own in terms of your business, so it’s your responsibility to maintain the upkeep of it, in order to protect your customers. Though because accidents do happen, premises coverage, as part of your CGL, will cover these types of losses.
What is operations coverage?
Imagine you own a window washing service. As a result, you would conduct business at multiple locations you don’t necessarily own, but instead travel to the other offices or businesses that buy your services. This is where operations coverage is necessary.
Perhaps you are washing the fifth floor windows while strapped to the building. If you were to drop a bucket of water and hit someone on the head, you would be liable for the resulting injuries caused to the individual.
Operations coverage would be triggered by the resulting claim for bodily injury. Of course, there are multiple businesses in which both coverage types are necessary. This one in particular helps if you don’t own the property that you’re working at, but you are involved in an accident of some sort while on the premises. It wouldn’t fall to the business owners because you’re the one who was involved, and you’re not employed by whomever hired you for your services.
An example of this may be the ownership of a landscaping company. You might have a fixed location where you sell lawn maintenance equipment, while also performing actual landscaping at multiple locations.
Read more: Liability vs. Medical Payments Coverage