Minnesota General Liability Insurance

Commercial General Liability (CGL) insurance protects businesses from liability claims arising from their operations, premises, products, and completed work.

Coverage Overview

What CGL Covers

Bodily Injury and Property Damage Liability:

• Injuries to customers, clients, or other third parties
• Damage to others' property
• Legal defense costs (in addition to limits)
• Settlements and judgments

Personal and Advertising Injury:

• Libel and slander
• False arrest and detention
• Malicious prosecution
• Copyright infringement in advertising
• Privacy violations

Medical Payments:

• Immediate medical expenses for injured parties
• No determination of fault required
• Goodwill gesture to prevent lawsuits

What CGL Does NOT Cover

Excluded:

• Professional liability (requires separate E&O insurance)
• Employee injuries (covered by workers' comp)
• Auto liability (requires commercial auto policy)
• Pollution liability
• Cyber liability and data breaches
• Intentional acts
• Property owned, rented, or in care/custody/control of insured

Exam Tip: CGL covers third-party bodily injury and property damage but NOT professional services, employees, autos, or owned property. These require separate policies.

Coverage A: Bodily Injury and Property Damage

Bodily Injury Liability

Covers:

• Physical injuries to customers, vendors, visitors
• Slip and fall accidents on premises
• Injuries from business operations
• Medical expenses, lost wages, pain and suffering
• Legal defense costs

Common Claims:

• Customer slips on wet floor in retail store
• Visitor trips over equipment at job site
• Client injured by defective product
• Person hurt during business delivery

Property Damage Liability

Covers:

• Damage to others' property
• Fire spreading to neighboring property
• Equipment damaging client's building
• Delivery driver damaging customer's property

Example:

• Plumber's torch causes fire damaging customer's home
• Landscaper's equipment damages client's fence
• Contractor's work causes structural damage

Coverage B: Personal and Advertising Injury

Personal Injury Coverage

Covered Offenses:

• False arrest, detention, imprisonment
• Malicious prosecution
• Wrongful eviction or entry
• Libel and slander (oral or written defamation)
• Privacy violations (use of person's likeness without permission)

Example Claims:

• Retail store falsely accuses customer of shoplifting
• Business owner makes defamatory statements about competitor
• Company uses person's photo in ad without permission

Advertising Injury Coverage

Covered Offenses:

• Copyright infringement in advertisement
• Slogan or trademark infringement
• Misappropriation of advertising ideas

Example Claims:

• Using competitor's slogan without permission
• Copying copyrighted material in advertisement
• Using another company's trademarked logo

Exam Tip: Personal and advertising injury covers libel, slander, false arrest, copyright infringement, and privacy violations. It does NOT cover professional liability (E&O) or business practices like breach of contract.

Coverage C: Medical Payments

How Medical Payments Work

Coverage:

• Pays medical expenses for injured parties
• Regardless of fault
• Small amounts: typically $5,000 or $10,000
• Goodwill gesture to prevent larger lawsuits
• No deductible applies

What's Covered:

• First aid
• Medical services
• Surgical expenses
• Ambulance services
• Hospitalization (if needed immediately)
• Must be provided within 1-3 years of accident

When It Applies:

• Injury on insured's premises
• Injury caused by insured's operations
• Injury caused by insured's products

Who Is Covered:

• Any person except insured or employees (workers' comp covers employees)

Example:

• Customer trips in store, twists ankle
• Medical payments pays $2,000 for treatment
• Customer satisfied, doesn't file lawsuit
• Without med pay, customer might sue for $50,000+

Exam Tip: Medical payments is a no-fault coverage providing quick payment for minor injuries. It's a goodwill gesture that often prevents larger lawsuits. Typical limits are $5,000-$10,000.

Occurrence vs. Claims-Made Coverage

Occurrence Coverage (Standard CGL)

How It Works:

• Covers claims arising from incidents during policy period
• Claims can be reported years later
• Coverage "follows" the policy year when incident occurred

Example:

• Policy period: 2024
• Incident: Customer injured in 2024
• Claim filed: 2028
• Coverage: 2024 policy responds (even though policy expired)

Advantages:

• Long-tail coverage
• No gap in coverage if policy canceled
• Better for products and completed operations

Claims-Made Coverage (Not Standard CGL)

How It Works:

• Covers claims made AND reported during policy period
• Incident must occur after retroactive date
• Claim must be reported during policy period

When Used:

• Professional liability (E&O)
• Directors & Officers (D&O)
• Employment Practices Liability (EPLI)
• Some environmental policies

Exam Tip: Standard CGL policies are OCCURRENCE-based. The policy in effect when the incident occurred responds, even if the claim is reported years later. Claims-made coverage is used for professional liability, not standard CGL.

Products and Completed Operations

Products Liability

Coverage:

• Injuries or damage caused by products you manufactured, sold, or distributed
• After product leaves your control
• Defective products
• Inadequate warnings or instructions

Who Needs It:

• Manufacturers
• Distributors and wholesalers
• Retailers
• Importers

Example Claims:

• Defective product injures consumer
• Product causes fire damaging home
• Inadequate warning leads to injury

Completed Operations Liability

Coverage:

• Injuries or damage from your work after completion
• Contractor's finished work
• Work handed over to customer

Example Claims:

• Roof repair fails, water damages building
• Electrical work causes fire months later
• Structural work collapses after completion

Aggregate Limit:

• Products/completed operations has separate aggregate limit
• Typically same as general aggregate
• Applies to all products/completed operations claims combined

Exam Tip: Products and completed operations coverage extends BEYOND the policy period for products sold and work completed during the policy period. This is critical for manufacturers and contractors.

CGL Policy Limits

Limit Structure

Per Occurrence Limit:

• Maximum paid for one occurrence (one accident/event)
• Typical: $1,000,000
• Includes damages and legal defense

General Aggregate Limit:

• Maximum paid for all claims during policy period
• Typical: $2,000,000
• Applies to most coverages EXCEPT products/completed operations

Products-Completed Operations Aggregate:

• Separate aggregate for products and completed operations
• Typical: $2,000,000
• Does NOT reduce general aggregate

Personal and Advertising Injury Limit:

• Per person or organization
• Typical: $1,000,000
• Subject to general aggregate

Medical Payments Limit:

• Per person
• Typical: $5,000 or $10,000
• Not subject to aggregate

Damage to Premises Rented to You:

• Limit for fire damage to rented premises
• Typical: $100,000 or $300,000

Exam Tip: Know the difference between per occurrence limits and aggregate limits. The per occurrence limit applies to one event. The aggregate limit is the total the policy will pay for all claims during the policy period.

Minnesota-Specific Considerations

Premises Liability in Cold Climate

Enhanced Risks:

• Slip and fall on ice/snow
• Roof snow/ice falling on pedestrians
• Frozen walkways and parking lots
• Ice dam damage to adjacent property

Duty to Maintain:

• Businesses must clear snow and ice
• Reasonable time after storm
• Warning signs for hazardous areas
• Failure to maintain can increase liability

Seasonal Business Risks

Winter Activities:

• Ski resorts and snow tubing
• Ice fishing operations
• Snowmobile rentals
• Winter outdoor recreation

Summer Activities:

• Water sports and boat rentals
• Camping and outdoor recreation
• Amusement attractions

Higher Risk:

• Attractive nuisance considerations
• Waiver effectiveness varies
• CGL critical for seasonal operations

Dram Shop Liability

Minnesota Dram Shop Law:

• Bars and restaurants liable for over-serving
• Liability if patron causes injury while intoxicated
• Server and establishment can be liable

Coverage:

• Standard CGL excludes liquor liability
• Requires Liquor Liability endorsement or separate policy
• Critical for bars, restaurants, venues serving alcohol

Business Owners Policy (BOP)

CGL in Business Owners Policy

BOP Combines:

• Commercial General Liability
• Commercial Property
• Business Income
• Package pricing

Advantages:

• Simplified coverage
• Cost savings vs. separate policies
• Suitable for small businesses

Eligibility:

• Small to medium businesses
• Low-hazard operations
• Offices, retail, light manufacturing

Exam Tip: A Business Owners Policy (BOP) includes CGL coverage along with property and business income. It's an efficient package for small businesses but not all businesses qualify for BOPs.