General Liability (GL) which is also called Commercial General Liability (CGL) insurance is not a bundled or an Umbrella Liability cover. GL or CGL provides coverage to a business for bodily injury, property damage, personal and advertising injury against third parties, as a result of the business operations of a company. This insurance policy provides more enhanced cover compared to Public Liability (PL). Public Liability insurance is limited to the legal liability of the insured against bodily injury and property damage caused to third parties due to the business operations of the insured. GL or CGL provides more enhance cover by including Personal and Advertising injuries to the policy coverage, and Product-completed-operations if the insured is into servicing. Under this policy, separate limit of liabilities are required to be provided under each section.
Demand for General Liability
Few years ago, Public Liability was the standard third-party liability that was common in the Ghanaian insurance market. Now, demand for General Liability insurance is on the rise and there is no standard policy wording in the domestic insurance market. This demand was as a result of multinational oil and gas companies who started operations in Ghana after the year 2000 when oil was discovered in the Western Region. Another reason was the fact the General Liability policy offers a wider cover than the Public Liability policy, and brokers seeking to please their clients result to seek General Liability cover instead of the standard Public Liability. Third, Public Liability cover is restricted to the loss or damage occurred within the insured business premises. But General Liability is not restricted to the business premise of the insured. It is extended to cover every location where the insured or its employees are working in connection to the insured’s business. For example, an insured who business office is in Accra is still covered when its employees are executing a project for a client in Kumasi. Whatever loss or damage the employees will caused to third parties in the course of their work in Kumasi or anywhere within Ghana, the General Liability policy has to pay for it.
General Liability Policy Coverage
This policy does not cover any liability policy that can be written as stand-alone policy. Unfortunately, many brokers put two or more liability polices together and called it General Liability, and insurers accept without raising any objection, simply because most underwriters do not understand what GL/CGL actually covers
Interestingly, as an underwriter, I have encountered many clients and brokers requesting for certain kinds of risks to be covered under General Liability policy for which those risks are not what are actually covered under this policy. When I interrogate them, they always tell me, there is no standard General Liability policy in the Ghanaian insurance market, and that they decide what type of coverage they want. It is really true. No insurance company in Ghana has standard General Liability policy wording. There are instances where brokers request for General Liability policy to cover Employers’ Liability, Contractual Liability, Workmen’ Compensation, Professional Indemnity, among other risks that are required to be stand-alone policies. So what does General Liability or Commercial General Liability actually covers:
Third Party Property Damage
Business organisations owed it a duty of care to protect the property of any member of the public in the course of their business operations. This duty is also placed on the employees of the organisation in the course of their employment towards any member of the public, usually called third parties. For example, when an employee of a company end up damaging the property of a client in the course of working at their homes or outside the premises of the insured company, the General Liability policy can help cover the repair or replacement costs to fix the damage. The same way, if fire or any item or peril leaves the premises of a company and end up destroying the property of any member of the public or a customer, the policy will compensate or fix that damage.
Third Party Bodily Injury/Death
Depending on the nature of any safety measures put in place by a business organisation, they may have a hard time imagining a situation in which a customer could be seriously or fatally injured, but it could happen. If it were to happen, The General Liability policy will cover any related medical costs. For example, a customer can slip, falls and hurt in an accident at the premises of a company. Employees in the course of performing their duties to their companies can also injured a third-party or any member of the public. General liability coverage can help pay for their medical expenses. If the injured person end up dying, the policy will compensate the family of the deceased.
Public Liability does not cover Personal injury but General Liability does. Personal Injury is psychological harm or mental agony caused to third parties by the insured or their employees due to false arrest, detention, or imprisonment, malicious prosecution, wrongful eviction, entry or invasion of privacy. When these happen to any third party, the person proven innocent can take a legal action against that company or the employee who did that following instructions from the employer. The General Liability can pay for the cost of the psychological harm caused to that third party.
Public Liability does not cover Advertising injury but General Liability does. Advertising injury can happen if a business or its employees defames another person, business owner, company, or steals the idea of a competitor. Examples of claims made under Advertising Injury are slander, libel, copyright infringement, and misappropriation of advertising ideas.
Products-Completed Operations is a coverage offered under General Liability policy. This protects a business organisation against liability claims resulting from the services or completed operations that were conducted away from the insured’s premises after those operations have been completed or abandoned. This section operates like product liability and covers a business organisation if a third party, usually a consumer is injured or has property damage as the result of the services rendered or the product distributed by the company. Most businesses find the products-completed operations coverage in General Liability sufficient for their needs. However, some businesses, such as manufacturers and product designers, face greater product liability risks and may need a standalone product liability policy.
This section provides limited coverage for medical payments including payments for injuries sustained by a non-employee caused by an accident that takes place on the insured’s premises or when exposed to the insured’s business operations, or caused by the insured’s own employees in the course of their work. This is “no fault liability” cover. It does not require negligence to be proven, and can be triggered without legal action. There is prompt settlement of smaller medical claims without litigation. Medical expenses under General Liability policy pays for all necessary and reasonable medical, surgical, ambulance and hospital costs for a person injured or killed in an accident that takes place at the insured’s premises or arising from business operations.
Legal Defence Costs
If a company is to be sued by a third party who has suffered from bodily injury or whose property is damaged due to the business activities of an insured or its employees, the costs associated with hiring a legal team and defending the insured in court can be huge, even if the lawsuit is ultimately unsuccessful. A lawsuit can also damage the reputation and hinder revenue. General Liability policy would pay for all the court costs and settlements resulting from the suit. It also covers legal expenses if a customer sues over injury or property damage as described above.
Who is covered under General Liability Policy?
- The insured
- Any subsidiary of the insured’s company
- Any business partner of the insured
- A Principal in the insured’s business in respect of vicarious liability
- Employees, Directors and officers of the insured
- Supporting and contract staff of the insured company
The policy is not restricted to the premises of the company, but also anywhere the company or their employees are working on behalf of the company. Because this policy covers business organisations and their employees against third party liabilities, it is required that the insurers or underwriters request for the list of names of all employees of the insured, and must be stated in the policy.
Limit of Indemnity
Indemnity is the liability of the insurance company in the event of a claim. Under standard General Liability cover, each and every section has its own limit of liability. There is no combined or aggregate limit. Medical expenses has a limited coverage and therefore, a specific amount should be provided by the insured for that cover, and that amount should be stated in the policy under that section.
Exclusions are the risks that General Liability policy do not cover. I made mention of some risks that brokers request to be covered under General Liability but are required to be stand-alone policies, and are excluded under this policy. Apart from the normal general exclusions found under almost every insurance policy, the following are also excluded under standard General Liability policy:
General Liability Policy do not cover employee injuries, employers liability or Workmen’s’ Compensation claims.
For auto accidents while doing business, a motor insurance policy financially protects a business organisation if they have motor insurance policy.
General Liability Policy covers non-professional negligence and not professional mistakes, errors, omissions or negligence. Professional mistakes, errors, omissions or negligence are covered under Professional indemnity policy
General Liability policy do not cover damage to the property belonging to the insured company. A property damage policy need to be purchased by the insured to protect their assets.
General Liability policy do not cover the pollution caused or escaped from the operations of the insured or their employees. Damages from pollution should be covered under pollution liability or environmental impairment liability.
General Liability policy do not cover claims related to contract issues or any liability that an insured assumed from a contract.
The General Liability policy do not cover claims related to illegal acts or wrongdoing that an insured or its employees did purposefully.
The writer is an experienced underwriter and a Chartered Insurance and Risk Management professional with the CII, UK. He is also a researcher of emerging risks, insurance policies and coverage.
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