General Liability Insurance made simple

Learn all you need to know about general liability insurance

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General Liability Insurance

Commercial General Liability Insurance (CGL) is another name for General Liability. With liability insurance, you are protected in the event that your business is blamed for someone else’s property damage or loss.

Your adviser can assist you in making the optimal liability coverage decisions for your company, staff, and directors. There are various forms of liability insurance in Canada; however, this article focuses more on General Liability Insurance.

In Canada, general liability insurance is made specifically to protect your company’s operations from claims of bodily harm.

Not only this, property damage involving your company’s operations, products, properties, and completed operations, as well as claims of personal injury and liability for advertising and personal injury.

When running a business in Canada, you may encounter a variety of everyday scenarios, such as:

  • While browsing your physical business, a customer slips on a wet floor and breaks their leg.
  • Building next door to the one being renovated by workers sustains unintended damage.
  • A business located below yours suffers damage due to a plumber you hired fixing a leaky toilet.

A general liability insurance policy offers financial protection against claims of third-party property damage and bodily harm resulting from negligence or unavoidable accidents caused by your company.

Regardless of how the litigation turns out, CGL insurance normally pays any compensatory damages imposed against your company and any defence costs.

What general liability insurance covers

The following areas are covered by general liability insurance, which also provides coverage for losses and legal costs:

Personal and Advertising Injury Liability: This category includes claims of slander, libel, defamation, and false advertising. 

Product liability: This occurs when a product you offered for sale results in a person’s property being damaged.

Bodily injury liability: This can be referred to liability for physical harm to another person or their property resulting from your company operations.

Tenant’s legal liability: Costs associated with maintaining or replacing other people’s property that you rent or use.

What general liability insurance does not cover

Typically, commercial liability insurance excludes the following from its coverage:

  • Contractual liability.
  • Intentional criminal behaviour.
  • Patent infringement.
  • Use of motor cars or other automobiles.
  • Professional services or advice you give (you need Professional Liability Insurance).

Additional insurance products your company should purchase

Business owners should take numerous forms of insurance into account when creating a complete insurance policy for their company to protect them from third-party liability lawsuits or allegations.

For details on specific coverage, look into the business insurance policies listed below:

  • Insurance for Professional Liability (also known as Errors and Omissions)
  • Insurance for Commercial Property
  • Business Auto Insurance
  • Insurance for Cyber risk and Data Breach Liability
  • Insurance for Directors and Officers
  • Insurance for equipment breakdown

The cost of general liability insurance for businesses

You should budget $450 yearly for a basic $2M Commercial General Liability Insurance policy for a small to medium-sized firm.

When choosing the optimum coverage options for you, the following elements are taken into account:

  • Experience in Years
  • Number of Employees
  • Yearly and Projected Gross Revenue
  • Recent Insurance Claims

People who need general liability insurance for businesses

As a small business owner, you interact with any third parties, including customers, vendors, and other companies who might be involved in an accident or allege your operation caused them injury or loss. For small enterprises, general liability insurance is advised if:

  • You either have an office or clients who come to your house.
  • You go to the home or business of your client.
  • You have employees who work remotely.
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Why CGL insurance is necessary

Some small business owners are unaware of the necessity for liability insurance or believe it to be prohibitively expensive. In actuality, your firm, no matter how little or operated from home, is nonetheless subject to many liabilities.

In fact, the effects of a liability lawsuit can be worse the smaller your company is. To protect themselves from danger and loss, every company ought to obtain at least a standard CGL coverage.

Disadvantages of operating without CGL insurance

Lack of CGL insurance may have a number of negative effects, such as:

  • Your business can be required to cover the costs of the legal process and any monetary losses that result from the litigation if you are found to be legally responsible for a third party’s physical harm or property damage.
  • Your standing with your consumers and customers could suffer significantly. Customers must have confidence in businesses and brands. If a case is handled improperly, that feeling of confidence may be destroyed.
  • You might be asked to provide an insurance certificate in a number of situations. The venue may frequently ask attendees to present a certificate of liability coverage if your firm participates in events like tradeshows or marketplaces. If you are a professional tradesperson or contractor, your clients might ask for your insurance certificate before allowing you to operate on their property.

Other forms of commercial liability insurance

Umbrella Liability

Umbrella liability insurance offers additional liability protection over and beyond the provisions of your existing policy.

It takes effect once your current plans’ liability cap has been reached and safeguards you in the event that your company is found accountable for someone else’s harm or property damage, whether that responsibility arises domestically or abroad.

You will get the following with umbrella liability coverage:

  • A more inclusive definition of Bodily Injury
  • A broad coverage
  • A Standard Excess Auto Policy covers licensed vehicles.

Errors and omissions 

Suppose you are a professional in private practice and you breach one of your obligations or a professional requirement. In that case, the repercussions could be severe and jeopardize not just the viability of your firm but also your personal assets.

Your liability for negligence, mistakes, and omissions while rendering your insured professional services is covered by errors and omissions liability insurance, often known as professional liability insurance.

This protection will pay for legal costs for your defense whether or not you are at fault if a lawsuit is filed against you for damages covered by your insurance policy.

Any individual, business, or partnership offering professional services in exchange for payment falls under the category of a professional, particularly if their line of work calls for:

  • Training that is both technical and practical
  • A dedication to strict professional principles, procedures, and service standards
  • Regional or federal legislation

Directors and officers

Directors and officers of corporations and nonprofit organizations have a lot of responsibilities on their shoulders: wrongful termination, bankruptcy, and defamation, to name just a few liability scenarios.

Your board members are covered from potential legal action by having Directors and Officers coverage, regardless of whether your company is a family-owned enterprise, nonprofit organization, an institution of higher learning, or community association. Your policy offers protection for:

  • Financial damages brought on by wrongdoing by you or a person covered by your insurance
  • Costs of legal defense

In addition to putting the company at risk for corporate liability, directors and officers may also be personally liable.

Crime 

Crime insurance guards your company against a wide range of risks that might result in unanticipated costs and missed time, such as employee dishonesty, theft, robbery, or burglary; fraud; and costs associated with a crime loss.

To safeguard your company against financial loss, loss of securities, or other property as a direct consequence of social engineering fraud committed by a person posing as a supplier, client, or employee, add Social Engineering Fraud coverage to your policy.

Other types of insurance

Business Insurance in AlbertaBusiness Insurance in ManitobaBusiness Insurance in British ColumbiaBusiness Insurance in New Brunswick
Business Insurance in Nova ScotiaBusiness Insurance in Newfoundland and LabradorBusiness Insurance in OntarioBusiness Insurance in Prince Edward Island
Business Insurance in QuebecBusiness Insurance in Saskatchewan

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Offers shown here are from third-party advertisers. We are not an agent, representative, or broker of any advertiser, and we don’t endorse or recommend any particular offer. Information is provided by the advertiser and is shown without any representation or warranty from us as to its accuracy or applicability. Each offer is subject to the advertiser’s review, approval, and terms. We receive compensation from companies whose offers are shown here, and that may impact how and where offers appear (and in what order). We don’t include all products or offers out there, but we hope what you see will give you some great options.

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August 14, 2023
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FAQs about general liability insurance

What risks are covered by general liability insurance?

General liability insurance plans often cover your firm and you for claims involving personal harm and property damage from your activities, services, or goods. It might also protect you in the event that you are accused of causing harm to your landlord's property.

What advantages does general liability insurance for businesses provide?

Your company is protected by general liability insurance from claims filed by members of the public for financial losses due to property damage, injuries, and fatalities for which you are legally responsible. And the public, in general, does not merely refer to customers or clients.

What amount of liability insurance is required by law in Canada?

There are possibilities to enhance the minimum amount of Third-Party Liability coverage, which is required by law to be at least $200,000. It will cover settlement fees and claims resulting from litigation in which you have been named, subject to the level of your policy.

Who does general liability insurance cover?

As an individual, you are covered, along with your spouse, but only in relation to the operation of a business where you are the only proprietor. You are an insured member in a partnership or joint venture, however, just with regard to how your firm is run. Your members, partners, and their wives are also insured.

Is having a general liability insurance legal?

Your company is not required by law to carry general liability insurance. If you do not have insurance, some companies may not want to engage in any business deal with you.

General Liability Insurance made simple

Learn all you need to know about general liability insurance

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