Commercial General Liability Insurance

Commercial General Liability Insurance In Ontario  

Many factors contribute to the success of a business. As a business owner, you know what it takes. A few important factors are hard work, focus, planning, and great staff. Regardless of the type of business you run or the industry you operate in, you are exposed to certain liability risks, such as being sued for allegedly causing third-party bodily injury or third-party property damage, that can cause significant upheaval in your business and compromise your financial success.  

The solution to managing those risks is having the right commercial general liability insurance package in Ontario. When it comes to insurance, you want to be sure your business is adequately protected. Commercial general liability insurance is designed to protect all of your company's assets should you incur litigation expenses due to having legal action brought against you in court for an insured peril.  

What Is Commercial General Liability Insurance?  

Commercial general liability (CGL) insurance is a type of business insurance policy that provides coverage for your business against claims for bodily injury and property damage to third parties arising from your premises, operations, products and completed operations. When considering business coverage such as commercial general liability insurance, Ontario business owners should note that CGL is a broad type of insurance policy that varies between types of businesses. It covers general liability risks associated with your business, meaning your commercial general liability insurance company would provide funds to cover legal defence fees, settlement costs, medical expenses and other related costs should you be required to defend yourself in court against claims that you or your business caused third-party injuries or property damage.  

Who Needs Commercial General Liability Insurance?  

If you're an owner of a business that's small or large, you are always at risk in some way or another. Without commercial general liability insurance, Ontario business owners have no coverage should a lawsuit claim be filed against them. This can have a hefty financial toll on your business. This type of policy can also protect you from legal fees so that your business and reputation remain safe and flourishing.  

What Types of Risk Exposures Does CGL Insurance Protect Against?  

When considering business policies such as commercial general liability insurance, Ontario business owners aren't always certain of what exactly it's for and what it covers. Essentially, a CGL policy exists to offer financial protection against unexpected expenses that arise due to liability situations such as:  

• Bodily Injury: This applies to the cost of litigation if you are sued because you or your business allegedly caused bodily injury to a third party.  
• Property Damage: If you are sued for allegedly causing damage to property that does not belong to you, including commercial spaces or equipment you rent, your CGL insurance can apply to related expenses such as attorney fees and settlement payments.  
• Personal Injury or Advertising Injury: Allegations of libel, slander, false advertising or defamation are covered by your commercial general liability insurance in Ontario should you be taken to court.  

 A typical example of a commercial general liability insurance claim is a scenario in which a customer or client enters your place of business and slips on a wet floor that was just mopped, suffering an injury. That customer could choose to sue your business to recoup medical expenses and compensatory damages, and the commercial general liability portion of your business insurance policy would provide you with funds to cover related costs up to the coverage limit on your policy.  

Are There Endorsements That Can Be Added to Commercial General Liability Insurance in Ontario?  

The risk exposures listed above are the most standard and basic types of coverage for commercial general liability insurance, but there is a wide range of endorsements that can be added to your CGL insurance policy. Endorsements are an excellent option to expand the scope of your coverage and make sure you have insurance that is tailored specifically to your needs, addressing the perils you are most likely to encounter during your business operations.  

Of course, no two businesses are exactly alike, and some endorsements will be better suited to your particular business than others. It's also worth noting that some CGL insurance endorsements are industry-specific. Here are some examples of the most popular endorsements that can be added to a policy for commercial general liability insurance in Ontario.  

Product Liability Insurance  

Product liability insurance provides crucial coverage for businesses involved in the product supply chain. This type of commercial liability insurance offers support for covering legal expenses in the event of a lawsuit stemming from property damage or bodily injury allegedly caused by your product or products. Whether the issue is related to design flaws, manufacturing defects, or marketing errors like incorrect labelling, product liability insurance is a significant endorsement for any business at risk of litigation due to the products or components it manufactures or fabricates.  

Product Recall Insurance  

No matter how cautious you are and how hard you work to ensure your products are flawless, there is always a chance of an error or oversight that could result in a product recall, whether it's voluntary or not. While product liability insurance provides coverage for legal costs arising from these mistakes, product recall insurance is essential to help manage the expenses directly related to the recall. This includes the retrieval and rehabilitation of the products, if feasible, the financial loss incurred from the recall, as well as expenses associated with reputation management and potential government or regulatory fines.  

Contractual Liability Insurance  

Contracts are a fact of life for most business owners, and while they can potentially offer some protection against liability, they can also leave you exposed to liability risks. Contractual liability insurance is an endorsement for commercial general liability insurance that can be added to your policy to offer you protection against the cost of lawsuits related to breach of contract and other contractual issues.  

Cyber Liability Insurance  

It's no secret that operating an online business exposes you to the threat of cyber attacks. However, in today's digital landscape, even traditional brick-and-mortar retailers engage in some form of online business and handle electronic information. If your business stores confidential data like credit card numbers or personal details, it is essential to safeguard this information from cybercriminals. By adding a cyber liability endorsement to your commercial general liability insurance in Ontario, you ensure that you are prepared for the expenses that may arise if you are targeted by a cybercriminal and face lawsuits from affected customers. This coverage not only addresses your legal defence costs and settlement expenses but also offers protection for additional circumstances, like ransom payments, to recover stolen information.  

Does CGL Insurance Cover Social Media Risks?  

Commercial general liability insurance can provide some coverage for social media risks, depending on the situation. The advertising injury portion of a CGL insurance policy offers you financial support if you are sued for slander, libel, invasion of privacy and copyright or brand infringement. Social media risks often center around those types of issues, which means you'll likely be filing a claim on your commercial general liability insurance in Ontario if you are sued for slander, libel or more that occurred on social media.  

Which Types of Expenses Are Covered By Commercial General Liability Insurance?  

If you are sued for a reason covered by your commercial general liability insurance in Ontario, what expenses can you expect to receive insurance compensation for? That does vary somewhat according to the endorsements you have added to your commercial general liability insurance policy. Still, in a general sense, the types of expenses covered by basic CGL insurance include:  

• Costs associated with your legal defence, such as court fees, attorney fees, legal mediation and more  
• Administrative costs related to the handling of your covered liability insurance claims  
• Settlement costs, such as the cost of replacing damaged property or covering medical expenses for a third party if you are found liable for those costs in court  

How Much Coverage is Necessary for Commercial General Liability Insurance?  

When it comes to coverage limits for commercial general liability insurance, Ontario residents are sometimes surprised to learn that $2 million is the minimum recommended amount—and in most cases, it's a good idea to have considerably higher coverage limits. That may seem unnecessary, especially if you've never been involved in a lawsuit before, but the truth is that liability expenses can easily exceed $2 million and often do. Your insurance carrier will only provide funds up to the coverage limit, so if your costs exceed that limit, you'll be forced to pay out of pocket for the remainder.  

Since it's not costly to increase coverage limits for commercial general liability insurance, Ontario business owners should consider including additional coverage in their policy; it's a sound investment that will protect your business's long-term success. Certain professions with higher risk exposure, such as excavation or demolition operations or sewer and water contractors, need at least $5 million in CGL insurance coverage.  

Is Commercial General Liability Insurance Legally Required?  

The government does not mandate that businesses must have commercial general liability insurance, and that's actually true of most types of business insurance. There are some exceptions, such as commercial auto insurance, a legal requirement for any business with commercial vehicles. As a result, you will not be fined or get into legal trouble with the government if you don't have commercial general liability insurance in Ontario.  

That being said, business owners need to understand that just because it's not legally required, that doesn't mean your business can function successfully without commercial general liability insurance. CGL insurance is considered a fundamental building block of any business insurance package. There's simply no way to avoid every single mistake, error in judgment or mishap that could lead to a lawsuit, and the costs of being sued for something like third-party bodily injury can add up to millions of dollars when all is said and done. Needless to say, most business owners can't pay those types of costs out of pocket and still remain in business. It's also important to remember that you can be accused of doing something you're not liable for, and you'll still be obligated to pay the cost of your legal defence in court without the financial support provided by commercial general liability insurance.  

As if that wasn't bad enough, not having commercial general liability insurance can affect your business negatively in other ways. Most commercial landlords won't rent or lease a commercial space to a business owner who can't produce a certificate of insurance listing necessary coverages, often including commercial general liability insurance. Suppliers, buyers and other parties you may need to contract with to keep your business running will typically also want you to have the right types of business insurance in the right amounts before they work with you. If you're not able to provide proof of insurance, you won't be able to close some deals or contracts, which diminishes your business' potential for success.  

What Is Not Covered By Commercial General Liability Insurance in Ontario?  

Commercial general liability insurance can cover a wide range of perils, depending on how your policy is written and the types of endorsements added, but it's certainly not applicable to every claim. As the name suggests, CGL insurance is a variety of liability coverage. That means it applies mainly to claims related to having legal action brought against you in court, and the reason why you are being sued informs the type of liability insurance coverage you need to get financial support for legal proceedings. Conversely, anything that is not related to you being sued doesn't fall under commercial general liability insurance. If a fire or natural disaster damages your property, for example, you would need to file a claim on your commercial property insurance, not your CGL insurance. You're also not covered for illegal acts or wrongdoings committed by yourself or your employees.  

What Other Types of Coverage Are Recommended to Complement CGL Insurance?  

Business Interruption Insurance  

Imagine the impact if you could not operate your business after a loss such as a fire. How would you carry on? How would you manage to continue to look after your customers? How would you manage if there was a drop in income due to the loss? This is when it can be essential to have Business Interruption insurance. Business interruption insurance can help cover these impacts. Property insurance coverage would indemnify you for insured direct damage claims to contents, stock, equipment, and buildings.  

Professional Liability Insurance (Errors & Omissions Insurance)  

Errors and omissions (E&O) insurance or professional liability insurance is specialized liability coverage required by companies that provide professional services, such as accountants, engineers, marketing professionals, consultants, and IT services. Despite the best intentions of professionals in these fields, an error or omission in the performance of services could cause financial losses to customers. Liability arising from a claim resulting from a professional service is excluded under the standard CGL insurance policy. The legal expenses to defend against the alleged failure to provide adequate professional services can be as significant as the actual claim. Coverage for legal costs for defending suits related to allegations of mistakes, negligence, missed deadlines, and more is available under errors and omissions or professional liability policy.  

Commercial Umbrella Insurance (Excess Liability Insurance)  

On a rainy day, an umbrella is handy. It provides extra protection from a storm. In terms of insurance, that's what commercial umbrella insurance does. It provides additional coverage by increasing a company's liability limit. An umbrella policy adds to the limit of an underlying commercial general liability policy. The liability portion of the underlying policy is the first to respond in the event of a loss. A commercial umbrella or excess liability insurance policy responds to eligible losses after the primary or underlying liability insurance limit has been reached.  

Can Commercial General Liability Insurance Be Bundled?  

Bundling insurance coverages is usually a good choice, and commercial general liability insurance is one of the coverages that can typically be bundled with other policies, depending on the insurance company. Commercial property insurance and business interruption insurance are two examples of coverage that are commonly bundled together with commercial general liability insurance in Ontario. If you're interested in bundling your business insurance coverages, speak with your knowledgeable broker at Morison Insurance to learn more about the options available to you. 

Where Can I Get A Commercial General Liability Insurance Quote?  

At Morison Insurance, we can take care of all your business insurance needs. An experienced commercial insurance broker knows how to identify and manage many of the risk factors in your business and will translate that knowledge into an insurance package to meet your needs. Give the insurance experts at Morison Insurance a call at 1-800-463-8074 to find out more about what we can do for you and your business.