Businesses must meet certain health, safety and operational codes. These regulations might require businesses to buy certain insurance coverage, and specific requirements vary. Still, there are few requirements for one type of coverage: commercial general liability (CGL) insurance. Still, that doesn't mean you shouldn't have it. A CGL policy is one of the most important policies you can buy.
What Is A CGL Policy?
A general liability policy applies to the risks that your business poses to others. There is a chance that your or your employees' mistakes or negligence could harm someone, like one of your clients. As a result, the harmed third party might sue your business for a variety of losses like:
- Bodily injuries they sustain and related lost income
- Property damage to their belongings
- Personal injuries from perceived libel or slander by the business
Your business might have to fight these claims and even settle with the party who claims harm. Your policy might help you afford these settlements and the related legal expenses.
Requirements And Regulations For CGL Policies
There are few laws that require a business owner to buy a CGL policy. However, by going without it, you might deprive yourself of a critical resource:
- You might have to address liability lawsuits even if you don't have coverage in place. You might face significant financial struggles trying to settle the damage. That could even put the business’s long-term stability at stake.
- If you contract with clients, then they might expect you to carry a CGL policy. If you cannot prove that you have a policy, then you might lose business or other opportunities.
Also, though you might not have to buy CGL coverage proper, you might have to buy other liability policies. Some of the required coverage you might need includes:
- Professional Liability Insurance: Also called malpractice insurance, this coverage will pay for damage done to clients through professional services. Doctors or lawyers must frequently have malpractice insurance before they can receive licensing.
- Workers Compensation Insurance: This liability coverage compensates employees who get hurt or sick on the job. To protect employee rights, most states require businesses to carry coverage.
- Directors & Officers Insurance: A D&O policy insures the personal assets of company principals if lawsuits target them. During recruitment, many C-level candidates ask if a business has this coverage. Failing to do so might cost you talent.
Therefore, consider a CGL policy a good starting point, and don't treat it as optional coverage. Instead, enhance it with coverage endorsements or separate specialty policies. It can serve as the foundation of a strong liability insurance portfolio.
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