IRDAI License Number: IRDAI/INT/ISNP/2022/250
Commercial general liability is a package liability policy which provides cover for a large spectrum of liabilities arising from various sources and eventualities. The coverage provided under different sections may look somewhat similar to the uninitiated but denote a specific benefit for different users.
The policy cover provided is wider than the standard bodily injury and property damage cover in a basic public liability insurance policy. The components covered in the policy are:
1.) Bodily injury and property damage
2.) Personal and Advertising injury – This is a coverage that insures the following offenses in connection with the insured's advertising of its goods or services:
a.) Libel
b.) Slander
c.) False arrest
d.) Infringing on another’s copyright
e.) Malicious prosecution
f.) Use of another’s advertising idea
g.) Wrongful eviction, entry or invasion of privacy
3.) Medical expenses – covered without the necessity of a legal process
4.) Defense costs for litigation are also covered
The policy is available both in claims made and occurrence basis formats.
Claims made policies cover liability event triggered during the Period of insurance, after the retroactive date, for which a claim is made on the insured who in turn makes a claim on the Insurer within the policy period. This in a way limits the Insurers’ liability to the Period of insurance.
Occurrence based liability policy is wider. It permits a liability claim to be lodged on the Insurer without a time restriction, so long as the trigger event had taken place during a period for which insurance policy was available
In addition to the right to defend clause in standard liability policies, CGL is also available in duty to defend format. This means that the insurer does not have an option to contest a liability action against the insured or not; he is bound by the “Duty to defend” clause. While coverage is always subject to “reasonable and necessary” defense costs, the parties’ working relationship and familiarity leads to fewer disputes as to what is “reasonable and necessary.”
The exposures covered by the CGL policy are quite wide. The cover distinctions are explained below:
1.) Premises liability
2.) Operations liability
3.) Product liability
4.) Completed operations liability
Standard distinction between a public liability and product liability insurance is that of On-premises liability and Ex-premises liability. So a Liability situation arising on the premises of the insured is considered to be covered under Public liability insurance & Product liability insurance covers one arising due to use of a product with manufacturing district, outside the manufacturing premises.
However the distinction between premises and operation liability on the one hand and between product and completed operations liability on the other can be appreciated by looking at the following real life situations:
a) An example of premises liability is- a visitor to your office on a rainy day slipping and suffering injury. Other example could be the display material on store shelves falling on a customer or a flower pot on the first floor falling and injuring a pedestrian.
b) Window Cleaner in a high rise building dropping a bucket on a person below illustrates the Operations liability at a premises.
c) A tyre with a manufacturing defect bursts and causes an accident on the highway- is an example of Product liability
d) A carpenter has not secured the wall fitted cupboard properly. A week later the covered falls on the the owner of the house and badly injured him.
