What Is Commercial General Liability Insurance (CGL)?

The only way to succeed in business is to assume responsibility for everything. Problems are always coming, and the unexpected is inevitable regardless of preparation.

Rather than frustrating with those losses, ask yourself how you can prevent it from happening again. You’ll find that you could have avoided the most expensive mistakes with a bit of preparation.

The customers don’t like the product. Spend more time researching the market.

Your traffic doesn’t convert. Learn where your ideal customer spends time and qualify your leads.

Your manufacturer sent defective products, causing lots of bad reviews. Inspect the inventory and get insurance before buying.

You can have the best product and target the right people. You still can’t predict the exact reaction clients will have. Some will love it, but others will consider it the worst product ever for whatever reason. Clients occasionally deal with frustrating problems because of your products, which can lead to lawsuits and millions of dollars lost.

The chance of that to happen is very tiny, but still possible — especially when launching new products.

What Is Commercial General Liability Insurance (CGL)?

As someone who doesn’t concern much about security, CGL is the primary type of insurance to consider, no matter the business to start. As soon as you have extra funds, there are good reasons to get a CGL at the very least.

Insurers will cover all the costs whenever someone tries to sue your business. It covers damages caused by employees and your products up to $1 million per occurrence. If you have more than two unfortunate events that year, you still have an extra $2 million aggregated.

You might want to start with $1 million of coverage and up to 5-10 million, depending on what you sell. You can extend the limit by buying bigger insurance plans.

For most businesses, that coverage is more than enough to protect against uncertainty. But there’s a dilemma when deciding whether you need it or not:

You may want to get CGL if:

  • You use vehicles as a retail business owner.
  • You have employees doing most of the work.
  • You work with customers with dangerous equipment.
  • Work with landlords or vendors who require coverage.

These apply mostly to construction, contracting, building design, consulting, healthcare, IT, nonprofits, and real estate. You could still get commercial liability insurance for other businesses, but events are unlikely to happen.

CGL covers your company for claims involving bodily injuries and property damage caused by your products or services. It may also protect you if you are held liable for damages to rented property.

It’s worth pointing out that CGLs protect you from liabilities only. Few companies will offer to pay for damages of any type. You can find other personal-business insurance plans. Insurers often give you a variable price based on your number of yearly occurrences.

You won’t have to pay for someone else’s damages. But any business losses are still your responsibility, whether it was a mistake, intentional damage, employee injuries, vehicle accidents, or personal property damage.

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