Commercial General Liability (CGL)

Purpose and Coverages of the CGL

Commercial General Liability (CGL) is the standard Insurance Services Office (ISO) form that protects a business against its liability to third parties for bodily injury, property damage, and certain offenses. It is the foundation of nearly every commercial casualty program. The CGL provides three distinct coverages, each with its own insuring agreement:

Coverage A is the heart of the form. Like the PAP, the CGL includes a duty to defend, and defense costs are paid in addition to the limits — and the insurer's duty to defend ends once the applicable limit is exhausted by payment of judgments or settlements.

Occurrence vs. Claims-Made Trigger

The single most-tested CGL concept is the coverage trigger — the event that activates coverage. The CGL comes in two versions:

• Occurrence form — covers bodily injury or property damage that occurs during the policy period, no matter when the claim is reported. A claim filed years later is still covered if the injury happened while the policy was in force. This protects against "long-tail" losses (e.g., latent injury).
• Claims-made form — covers claims first made (reported) during the policy period, provided the injury occurred on or after the policy's retroactive date. It is cheaper for the insurer because it caps the reporting window.

Claims-made policies rely on two key features:

• Retroactive date — the earliest date an occurrence can have happened and still be covered; injuries before this date are excluded.
• Extended Reporting Period (ERP), or "tail" — an option to report claims after the policy expires for occurrences that happened after the retro date but before expiration. The basic tail is automatic; a supplemental (purchased) tail extends the window further.

An occurrence is defined as an accident, including continuous or repeated exposure to substantially the same harmful conditions.

Exposures Covered and the Limits Structure

The CGL responds to several major business exposures:

• Premises and operations — injury or damage arising from the insured's premises or its ongoing business operations (e.g., a customer slips in the store; a contractor damages property while working).
• Products-completed operations — injury or damage that occurs away from the insured's premises and arises out of the insured's product or completed work after it has left the insured's control (e.g., a defective product injures a user months later; a building collapses after the contractor finished).
• Independent contractors, contractual liability (insured contracts), and host-liquor liability round out the typical exposures.

The limits structure layers a per-loss cap beneath annual ceilings:

The crucial distinction: products-completed operations losses erode their own separate aggregate, not the General Aggregate. Once an aggregate is exhausted by paid claims during the policy year, no more is payable under that aggregate even if the per-occurrence limit has room.

Who Is Insured, Exclusions, and the Business Owners Policy

The CGL's Who Is An Insured section automatically covers, depending on the named insured's form of organization, the individual owner and spouse, partners and their spouses, members and managers of an LLC, and a corporation's executive officers, directors, and stockholders while acting in that capacity — plus employees and volunteer workers for acts within the scope of their duties (with limits, such as no coverage for injury to a co-employee). Additional insureds (landlords, lenders, customers) are added by endorsement.

Key exclusions keep the CGL from overlapping other policies or covering uninsurable conduct:

• Expected or intended injury — deliberate harm is not an accident.
• Contractual liability — except liability assumed under an "insured contract."
• Workers compensation and employers liability — bodily injury to the insured's own employees (that belongs in the WC&EL policy).
• Auto, aircraft, and watercraft liability — covered by separate policies.
• Damage to your product / your work / property in your care — the CGL is not a performance warranty or property policy.
• Pollution — broadly excluded, with narrow exceptions.

For small and medium businesses, the Business Owners Policy (BOP) packages CGL-style liability together with commercial property in one simplified contract at a favorable price, while larger or more complex risks use the modular Commercial Package Policy (CPP) that bolts the CGL onto property, crime, and other coverage parts. In every case the CGL supplies the third-party liability backbone of the commercial program.