Commercial General Liability Insurance: Coverage, Claim & Exclusions

Updated: 01-10-2019 11:44:31 AM

Business organisations may face some risks due to legal and financial liabilities resulting from your services, business operations and/or your employees. In order to protect yourself from such risks, companies must take preventive measures like enrolling in a commercial general liability insurance protection.

What is Commercial General Liability Insurance?

A commercial general liability insurance is a type of commercial insurance designed to protect businesses of all sizes from financial liabilities that may arise due to various issues affecting the third party. It basically shields you, your business and your employees from expenses arising out-of-court settlements as well as judgements awarded by courts.

What all Commercial General Liability Covers?

This type of insurance policy generally provides a comprehensive coverage against:

Bodily injury and damage to the property: If a person faces some bodily injury while being on the premises of your business location or does so after having your services, compensation to such a person shall be paid by the insurance company.

Damage due to misleading advertisement: If there was a misleading advertisement due to which a customer suffered image damage due to issues like a false arrest, insult, defamation, loss due to infringement of the copyright, stealing of idea, etc. , compensation for the same will be taken care of by the insurance provider on your behalf.

Medical expenses: Payments for injuries sustained by someone (not an employee) due to an accident on the insured’s premises or due to insured’s business operations will be covered. Medical expense coverage can be invoked without legal action (like small medical claims without litigation). All reasonable medical, ambulance, hospital or professional nursing and funeral expenses for the injured/deceased person will also be be covered.

Add-on Coverage 

Add-on coverage or riders are additional benefits on the payment of extra amount. Following riders can be attached to the base policy to enhance the coverage on payment of extra money:

• Act of God Perils Extension
• Sudden and Accidental Pollution Extension
• Transportation Liability Extension
• Lift, Elevator & Escalator Liability Extension
• Food and Beverages Liability Extension
• Personal & Advertising Injury extension
• Fire Damage Extension
• Medical Expenses Liability Extension
• Limited Vendors Liability Extension
• Liquor Liability

How Commercial General Liability Functions?

• Post purchase of the policy, it is important on the behalf of the policyholder to take all necessary measures to keep away from easily avoidable claim-arising situations
• Like any other insurance policy, this policy also comes into action upon solicitation by the policyholder
• At the event of a claim-arising situation, if and when the policyholder invokes the policy, it becomes active
• Upon filing the claim, insurance company comes into action of verification of the thus made claim
• All aspects of the life insured and the third party (along with the incident thus occurred) are well-scrutinised so as to not leave any loophole for deceive
• If all seems as per the policy and the points mentioned therein, the insurance company makes it a point to release the claim amount within the specified period of time

Eligibility Criteria

A commercial general liability insurance can be taken by organisations involved in:

• Manufacturing and construction
• Non-industrial activities (hotels, multiplexes, offices, etc.)

Claim Process

Some important points regarding claims under Commercial General Liability Insurance policy are listed below for reference:

• Inform the insurance company on their toll-free number and/or on other channels suggested in the policy document in the written form
• Once the information is verified by the insurance company, generally a case is created for claims settlement and is assigned to the claims department
• An investigator or surveyor is appointed to validate the authenticity of the claims requested after completing the investigation process and submitting the Survey Report
• You may have to submit various documents to support the claim
• The insurance company then takes reference from the policy document of the policyholder and analyses the Survey Report submitted by the surveyor to decide about the claim amount
• The insurance company disburses compensation related to the claims requested based on the terms and conditions of the policy document and internal approvals

Documents Required for Claim Process

Following documents are needed by the policyholder while filing claims.

• ID Proof of the insured/ claimant
• Copy of the policy document
• FIR report, if any
• Document explaining type of claim, extent of loss, location of the loss, etc.
• Any other documents asked by the insurance company

Exclusions under Commercial General Liability Insurance

Not all cases and situations are covered by commercial general liability insurance. These are called exclusions. Some of the events not covered are:

• Deliberate or willful act of negligence or mishandling that may result in financial liability
• Automobile manufacturing companies which may recall their vehicles due to an error in the automobile caused by a fault or bad quality during the manufacturing process cannot claim this protection
• Any deliberate action that may cause a bodily or physical injury to anyone in the insured premise
• Workers compensation and similar laws that may result in any financial liability
• Professional Liability Insurance and Business Owners Policy are also excluded from this policy by some insurance companies
• War or allied perils, acts of terrorism, invasion, nuclear risks, etc. are also not covered

Companies Offering Commercial General Liability Insurance in India

• IFFCO Tokio General Insurance Co. Ltd.
• SBI General Insurance Co. Ltd.
• Future Generali India Insurance Co. Ltd.
• TATA AIG General Insurance Co. Ltd.
• HDFC ERGO General Insurance Co. Ltd.
• Bharti AXA Life Insurance Co. Ltd.
• Bajaj Allianz General Insurance Co. Ltd.
• Liberty General Insurance Ltd.

Important Aspects

Apart from all the information stated above, one must take a look at the other important aspects of this particular policy:

• This type of insurance policy is usually offered to all sizes of Indian businesses which are operating in India or abroad and also to foreign organisations operating in India
• It is important for the insured to keep their business premises free of hazard-prone possibilities
• All necessary equipment must be installed in the premises to cope with minor incidents of fire, short-circuit, etc.
• Liabilities arising out of sudden or accidental pollution, goods in storage by the insured, terrorism etc. can be prevented from having an extension through add-ons with this policy
• The policyholder can choose the flexible payment options for premium amount under this policy. Customers can choose to make payments on a monthly basis to pay premiums
• Policyholders can enjoy flexible premium payment options that provide convenience to the organisations that do not wish to pay the premium amount on an annual basis

Advantages of Buying Commercial General Liability 

Any business, big or small, needs to protect themselves from any kind of trouble, including lawsuits. A commercial general liability insurance helps manage such situations. Some of the benefits of this insurance are:

• Your business will be protected in case your business is responsible for damage to other’s property
• In case others are hurt or injured due to your business, the insurance will help deal with such expenses
• In case any lawsuit is filed against your business, this insurance helps manage expenses related to attorney, court hearings and other compensation

FAQs

Q1. Should a small fashion boutique also purchase insurance protection under Commercial General Liability Insurance?

Yes, small businesses have tremendous risks arising out of financial liabilities that are covered under this insurance policy.

Q2. How much time is generally taken by insurance companies to settle claims under the Commercial General Liability Insurance?

An insurance company usually takes around 30 days to settle claims under this policy after all investigation and submission of valid documents and the Survey Report. However, claims are settled or rejected based on terms and conditions of the policy.

Q3. Is the financial liability arising due to the legal suit for unsettled compensation of the factory worker covered under this insurance?

No, workmen compensation and any such other laws are generally excluded by mostly all the insurance companies in India for settling any claims.