Commercial general liability (CGL) policies help mitigate the risk that businesses face. CGLs provide coverage in many cases where someone sues your business over an injury to themselves or their property. However, it is important to know that your CGL policy may not apply in all cases.
There are a number of situations that insurers often exclude when providing CGL coverage. In those cases where an exclusion to the CGL applies, the insurance company will not cover that kind of liability should it arise. Thus, it is important to be aware of the different types of exclusions and to know what exclusions a given policy may or may not have before you purchase it.
Below are 10 common commercial policy exclusions. You may need to purchase separate, specialized policies to cover liability in these situations even if you have a CGL:
- Pollution – This can include claims of damage to property brought by private parties due to hazardous materials used by your business.
- Product Recall – CGLs normally do not apply where a company suffers loss because it is forced to recall defective or faulty products. This includes not just the loss of the value of the products but the cost of the recall itself.
- Third-Party-Over Action – This is a situation where one party agrees to indemnify a second party (that is, compensate the second party for a financial loss). If this exclusion is in place, the CGL of the first party will not cover the indemnification.
- Back Taxes – CGLs will not cover back taxes imposed by the government.
- Penalties Imposed By Government Agencies – Government agencies can impose fines for violations of labor laws, wage laws, workplace safety laws, and others. This is often excluded from CGLs.
- Liability Related to Operating an Automobile or Truck – Damage caused by such things as an employee’s operation of a business’s automobile are covered by separate policies.
- Corporate Director and Officer’s Liability – This can include the damages from and costs of legal defense for actions brought against directors and officers of a company for wrongful acts.
- Expected/Intended Injury – This is an exclusion that applies where the insured actually intended to cause an injury.
- Damage to Completed Work/Product – This applies to situations where the business has completed some work or sold a product and the work or product then suffers damage.
- Professional Negligence/Errors and Omissions – This applies where the negligence of professionals such as attorneys, stockbrokers, advertising companies, and many others causes harm to their clients. It is very important to have Errors and Omissions coverage, as any mistake that you or your firm make can result in damages suffered by a client. If this type of coverage is excluded under your CGL, it may be a good idea to purchase it separately.
For help regarding your company’s commercial insurance policy, contact one of our experienced insurance coverage attorneys today
If you are unsure what is and is not covered by your CGL or other insurance policy, you may need the help of an experienced insurance coverage attorney. The attorneys at Berkowitz Klein have been representing businesses in insurance coverage disputes in Pennsylvania for over over 25 years. Contact Gerald Berkowitz today by calling (610) 889-3200.