General Liability Insurance

Commercial General Liability (CGL) Overview

Commercial General Liability (CGL) insurance is the foundation of business liability protection. It covers claims brought by third parties for bodily injury, property damage, and personal/advertising injury occurring in connection with business operations.

CGL Coverage Parts

The standard CGL policy (ISO form CG 00 01) includes three main coverage parts:

Coverage A: Bodily Injury and Property Damage Liability

Bodily Injury includes:

• Physical injury to any person
• Sickness or disease sustained by any person
• Death resulting from injury or sickness
• Mental anguish when accompanied by physical injury

Property Damage includes:

• Physical injury to tangible property
• Loss of use of tangible property that has been physically damaged
• Loss of use of tangible property not physically injured

What Coverage A Pays:

• Damages the insured is legally obligated to pay
• Defense costs (typically in addition to limits)
• Supplementary payments (court costs, bail bonds, etc.)

Coverage A Exclusions (common examples):

• Expected or intended injury
• Contractual liability (with exceptions)
• Liquor liability
• Workers' compensation and employer's liability
• Pollution (with limited exceptions)
• Damage to insured's own work or products
• Professional services (requires separate E&O policy)

Coverage B: Personal and Advertising Injury Liability

Personal Injury offenses:

• False arrest, detention, or imprisonment
• Malicious prosecution
• Wrongful eviction, wrongful entry
• Slander, libel, defamation of character
• Violation of right of privacy

Advertising Injury offenses:

• Oral or written publication disparaging goods/services
• Copyright infringement in advertising
• Misappropriation of advertising ideas
• Infringing upon another's advertising slogan

Coverage B Exclusions:

• Knowingly publishing false material
• Material published with knowledge of falsity
• Breach of contract
• Failing to conform to quality claims
• Infringement of patent, trade secret, trademark

Coverage C: Medical Payments

• Pays medical expenses regardless of liability
• Covers persons injured on insured's premises
• Covers persons injured due to insured's operations
• Limit typically $5,000 to $10,000 per person
• No fault coverage - "good will" protection
• Does not cover insured's employees (workers' comp)

Occurrence vs. Claims-Made Policies

Occurrence Basis

An occurrence policy covers claims arising from incidents that occur during the policy period:

• Trigger: Injury/damage must occur during policy period
• When claimed: Doesn't matter when claim is filed
• Coverage longevity: Coverage continues even after policy expires
• Advantage: Long-tail protection for delayed claims

Occurrence Example: Policy period: January 1 - December 31, 2026 Injury occurs: June 15, 2026 Claim filed: March 1, 2029 Result: Covered (injury occurred during policy period)

Claims-Made Basis

A claims-made policy covers claims first made during the policy period:

• Trigger: Claim must be made during policy period
• Retroactive date: May limit coverage for prior acts
• Tail coverage: Extended reporting period may be needed
• Advantage: More predictable for insurers, lower initial cost

Claims-Made Example: Policy period: January 1 - December 31, 2026 Injury occurs: June 15, 2026 Claim filed: March 1, 2029 Result: Not covered (claim made after policy expired, unless ERP purchased)

Extended Reporting Period (ERP) / Tail Coverage

For claims-made policies:

• Extends the period to report claims after policy expires
• Critical when switching insurers or retiring
• Basic ERP often included (30-60 days)
• Supplemental ERP available for purchase (1-5 years or unlimited)
• Does not extend the retroactive date

Exam Tip: Most CGL policies are occurrence-based. Claims-made is more common for professional liability and D&O coverage. Know the difference for the exam!

Missouri-Specific Liability Considerations

Missouri Tort Law Considerations

Missouri businesses should understand:

• Pure comparative negligence: Plaintiff can recover even if mostly at fault
• Joint and several liability: Each defendant can be liable for full amount
• No damage caps: Missouri has limited caps on damages in most civil cases
• Punitive damages: May be awarded for egregious conduct

Certificate of Insurance Requirements

Many Missouri contracts require:

• Named as additional insured on CGL policy
• Certificate of insurance provided before work begins
• Primary and non-contributory endorsement
• Waiver of subrogation endorsement
• Specific minimum limits (often $1,000,000 or more)

Missouri Liquor Liability (Dram Shop)

Missouri's dram shop law creates liability for:

• Commercial establishments serving alcohol
• Serving visibly intoxicated persons
• Serving minors
• Requires separate liquor liability coverage (excluded from standard CGL)

Premises Liability in Missouri

Business owners owe duties to:

• Invitees (customers): Highest duty - inspect, warn, make safe
• Licensees (social guests): Warn of known dangers
• Trespassers: No duty except avoid willful injury (with exceptions for children)

Professional Liability Insurance (Errors & Omissions)

What Professional Liability Covers

Professional liability (E&O) insurance covers:

• Errors in professional services
• Omissions or failure to perform
• Negligence in providing professional advice
• Breach of professional duty

Why CGL Excludes Professional Services

Standard CGL policies exclude coverage for professional services because:

• Higher risk profile of professional advice
• Need for specialized underwriting
• Claims-made coverage more appropriate
• Different coverage triggers and conditions

Professions Requiring E&O Coverage

E&O Policy Features

• Claims-made basis: Most common trigger
• Retroactive date: Limits coverage for prior acts
• Prior acts coverage: May need to be purchased
• Defense costs: Often within limits (erode coverage)
• Consent to settle clause: May require insured's approval

Umbrella and Excess Liability Policies

Umbrella Liability

Umbrella policies provide:

• Additional limits above underlying policies
• Broader coverage than underlying policies
• Coverage for claims excluded by underlying (drop-down)
• Typically $1 million to $10 million in additional coverage

Underlying Requirements:

• Must maintain specified underlying limits
• Common requirements: CGL, auto liability, employer's liability
• Gap in underlying may void umbrella coverage

Excess Liability

Excess policies provide:

• Additional limits only (no broader coverage)
• Follow form of underlying policy
• Coverage only when underlying exhausted
• No drop-down protection

CGL Limits Structure

Per Occurrence Limit

• Maximum paid for any single occurrence
• Applies to Coverage A (BI/PD)
• Common amounts: $1 million, $2 million

General Aggregate Limit

• Maximum paid for all claims in policy period
• Typically 2x the per occurrence limit
• Applies to Coverage A (except products/completed operations)
• Once exhausted, no further claims paid

Products-Completed Operations Aggregate

• Separate aggregate for products and completed work claims
• Typically equal to general aggregate
• Important for manufacturers and contractors

Personal and Advertising Injury Limit

• Per offense limit for Coverage B claims
• Subject to general aggregate

Medical Payments Limit

• Per person limit for Coverage C
• Common amounts: $5,000 - $10,000

Risk Management Considerations for Missouri Businesses

Adequate Limits Selection

Consider:

• Nature of business operations
• Contract requirements from customers/clients
• Asset protection needs
• Historical claims experience
• Industry standards and benchmarks

Common Endorsements

• Additional insured endorsement: Adds third parties as insureds
• Waiver of subrogation: Waives insurer's right to recover from named party
• Primary and non-contributory: Makes policy respond first
• Per project aggregate: Separate aggregate for each project

Coverage Gap Prevention

Avoid gaps by:

• Reviewing exclusions carefully
• Adding appropriate endorsements
• Coordinating CGL with other policies
• Maintaining consistent policy periods
• Working with knowledgeable insurance professionals