General Liability Insurance

Commercial General Liability (CGL) insurance is essential protection for Maine businesses against third-party bodily injury and property damage claims. Understanding CGL coverage, exclusions, and Maine-specific exposures is critical.

Commercial General Liability (CGL) Policy

CGL Coverage Form (CG 00 01)

The standard CGL policy provides three main coverage sections:

Coverage A: Bodily Injury and Property Damage Liability

• Pays for bodily injury or property damage caused by business operations
• Legal defense costs (in addition to liability limits)
• Occurrence-based coverage trigger

Coverage B: Personal and Advertising Injury Liability

• Non-physical injuries (defamation, copyright infringement, etc.)
• Advertising-related claims
• Separate aggregate limit

Coverage C: Medical Payments

• No-fault medical coverage for others injured on premises
• Typically $5,000-$10,000 limit
• Goodwill coverage (pays regardless of legal liability)

Occurrence vs. Claims-Made

Occurrence Basis (Standard CGL):

• Coverage applies based on when injury/damage occurs
• Claim can be filed years later
• Long-tail liability protection
• Most common for CGL

Claims-Made Basis (Some professional liability):

• Coverage applies when claim is made (not when injury occurred)
• Requires continuous coverage
• Retroactive date important
• Used for professional liability, employment practices

Exam Tip: Standard CGL policies are occurrence-based. If injury occurs during policy period, coverage applies even if claim is made years later.

Coverage A: Bodily Injury and Property Damage

What's Covered

Bodily Injury:

• Physical injury, sickness, disease
• Death resulting from injury
• Medical expenses, lost wages, pain and suffering
• Includes mental anguish from physical injury

Property Damage:

• Physical damage to tangible property
• Loss of use of damaged property
• Loss of use of undamaged property

Coverage Territory

CGL coverage applies within the coverage territory:

• United States (including territories)
• Canada
• International waters/airspace (between US and Canada)
• Worldwide if suit brought in coverage territory

Maine businesses operating internationally need to verify coverage territory.

Defense Costs

Duty to Defend:

• Insurer pays all defense costs
• Defense costs in addition to liability limit
• Right and duty to defend insured
• Insurer controls defense and settlement

Example:

Limit: $1,000,000 per occurrence Claim: $800,000 settlement Defense costs: $150,000

Insurer Pays:

• $800,000 settlement (within limit)
• $150,000 defense costs (in addition to limit)
• Total insurer payment: $950,000

Premises and Operations Coverage

Premises Liability

Covers injuries/damage at business location:

Common Maine Premises Claims:

• Slip and fall on ice/snow: Customer slips on icy sidewalk outside retail store
• Trip and fall: Customer trips on uneven flooring, loose carpet
• Falling objects: Items fall from shelf onto customer
• Inadequate maintenance: Railing breaks, customer falls down stairs
• Dog bite: Business dog bites visitor (limited coverage)

Maine Winter Premises Liability

Significant Exposure:

• Snow and ice accumulation on walkways, parking lots, steps
• Black ice formation
• Roof ice/snow falling on customers
• Inadequate snow removal

Legal Standard:

• Business must exercise "reasonable care" to maintain safe premises
• Regular snow removal expected
• Salt/sand application
• Warning signs where appropriate
• Cannot eliminate all ice/snow (Maine courts recognize practical limits)

Insurance Approach:

• Adequate CGL limits (minimum $1 million recommended)
• Regular maintenance program
• Documentation of snow removal efforts
• Premises liability loss control

Operations Liability

Covers injuries/damage from business operations away from premises:

Examples:

• Contractor working at customer's home
• Landscaper damages client's sprinkler system
• Painter spills paint on customer's floor
• Delivery driver drops package on customer's foot

Products-Completed Operations Coverage

Products Liability

Covers injuries/damage from products sold/manufactured:

Coverage Trigger:

• Injury occurs after insured relinquishes possession of product
• Product defect or failure
• Inadequate warnings or instructions

Maine Examples:

• Food manufacturer: Product contamination causes illness
• Retailer: Defective product sold causes injury to consumer
• Distributor: Faulty equipment causes property damage

Completed Operations Liability

Covers work-related injuries after work is completed:

Coverage Trigger:

• Work is finished or abandoned
• Injury occurs away from work site
• Defect in completed work causes injury

Maine Contractor Examples:

• Roof collapses 6 months after installation
• Faulty electrical work causes fire
• Deck stairs collapse injuring homeowner
• Plumbing repair fails, causing water damage

Aggregate Limit

Products-Completed Operations has separate aggregate limit:

Typical Structure:

• $1,000,000 per occurrence
• $2,000,000 Products-Completed Operations Aggregate
• $2,000,000 General Aggregate (for all other claims)

Exam Tip: Products-Completed Operations aggregate is separate from General Aggregate, providing additional capacity for product/completed work claims.

Personal and Advertising Injury (Coverage B)

Non-Physical Injuries

Coverage B covers these specific offenses:

Personal Injury:

1. False arrest, detention, imprisonment
2. Malicious prosecution
3. Wrongful eviction or entry
4. Slander or libel (oral or written defamation)
5. Invasion of privacy

Advertising Injury:

1. Copyright, trademark, or trade dress infringement in advertisement
2. Misappropriation of advertising ideas
3. Infringement of title/slogan

Maine Business Examples

Retail Store:

• Security guard falsely detains customer for shoplifting (false arrest)
• Store posts customer's photo claiming they're a thief (defamation)

Advertising Agency:

• Uses competitor's slogan in client's advertisement (trademark infringement)
• Copies competitor's ad concept (misappropriation)

Landlord:

• Evicts tenant without proper legal process (wrongful eviction)
• Enters tenant's apartment without permission (wrongful entry)

Key CGL Exclusions

Important Exclusions to Know

Expected or Intended Injury Exclusion

CGL does NOT cover:

• Injuries/damage insured expected or intended
• Intentional acts by insured
• Criminal acts

Exception: Reasonable force to protect persons or property may be covered.

CGL Limits Structure

Per Occurrence and Aggregate Limits

Typical CGL Limits Structure:

How Limits Work

Example Claims:

Year 1:

• Claim 1: $400,000 premises liability → Paid
• Claim 2: $600,000 operations liability → Paid
• Claim 3: $800,000 products liability → Paid

Limits Status After Claims:

• Each occurrence: $1,000,000 (renews per claim)
• General Aggregate: $1,000,000 remaining ($2,000,000 - $400,000 - $600,000)
• Products Aggregate: $1,200,000 remaining ($2,000,000 - $800,000)

Aggregate Exhausted: If General Aggregate is depleted, no more coverage for premises/operations claims that policy year (products coverage still available under separate aggregate).

Additional Insureds

Extending CGL Coverage

Businesses often add additional insureds to CGL policy:

Common Additional Insureds:

• Property owners/landlords (tenant businesses)
• General contractors (subcontractors)
• Municipalities (work on public property)
• Certificate holders requiring coverage

Endorsement Required: CG 20 10 (or similar) adds additional insured status.

Coverage Provided to Additional Insured:

• Only for vicarious liability arising from named insured's operations
• No coverage for additional insured's sole negligence
• Subject to policy limits and terms

Maine Example:

Subcontractor adds general contractor as additional insured. Subcontractor's work causes injury. General contractor is sued along with subcontractor. CGL coverage extends to general contractor for vicarious liability.

Maine Business Liability Exposures

Hospitality and Tourism

Restaurants/Hotels:

• Foodborne illness (products liability)
• Slip and fall (premises liability)
• Liquor liability (separate coverage needed)
• Swimming pool/recreational facilities

Marine and Fishing

Commercial Fishing Support:

• Dock liability
• Equipment sales/service liability
• Fuel spills (pollution exclusion applies)
• Maritime exposures (may need maritime coverage)

Contractors and Construction

High Liability Exposure:

• Property damage to customer property
• Completed operations (defective work)
• Additional insured requirements
• Subcontractor liability

Retail and Service

Typical Exposures:

• Customer slip and fall
• Product liability (if selling products)
• Advertising injury (marketing claims)
• Winter premises liability (ice/snow)