Commercial general liability (CGL) insurance protects against a broad range of potential claims from third parties that could devastate your business. But while CGL policies cover defense costs and losses for many categories of claims, this type of insurance has significant exclusions.
What does CGL Insurance Cover?
A CGL policy typically covers all sums that you become obligated to pay – including legal costs, settlements and judgments, up to the policy limit – for claims of bodily injury or property damage arising out of an occurrence, or accident. Many CGL policies also provide coverage for personal or advertising injury, which refers to injury stemming from certain specified offenses, such as infringing on another’s copyright or trade dress, or slandering, libeling or violating the right to privacy of a third party through publication of oral or written material.
Your CGL policy will safeguard you against a broad range of lawsuits, from a bodily injury claim brought by a client who slipped and fell on your business property, to allegations of damage to a vendor’s property while it was under your care, to an intellectual property infringement claim brought by a competitor.
What does CGL Insurance Exclude
While every CGL policy is unique, certain exclusions are common across most policies. CGL policies generally exclude injury or damage caused by harmful, intentional or wrongful acts, pollution liability, professional liability, workers’ compensation claims and vehicle liability.
Harmful, Intentional or Wrongful Acts
CGL policies provide no coverage for the insured’s harmful, intentional or wrongful acts, such as assault and battery or deliberate property damage. The exclusion applies to bodily injury or property damage intended by, or which may reasonably be expected to result from the intentional or criminal acts or omissions of, the insured. In determining whether bodily injury or property damage resulted from an accident or intentional act, courts will look at the intent behind the action.
Pollution Liability
While individual policies may have slightly different wording, the pollution exclusion generally pertains to bodily injury or property damage arising out of the discharge, dispersal, release or escape of irritants, contaminants or pollutants, including smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids, gases, and waste materials, into or upon the land, atmosphere or water, whether or not such discharge, dispersal, release or escape is sudden or accidental. Courts have generally interpreted the exclusion to bar coverage for all property damage caused by pollution or environmental contamination. Some companies purchase separate environmental insurance policies to protect against claims arising from contamination incidents.
Professional Services Exclusion
The professional services exclusion refers to personal injury or property damage that arises out of the insured’s rendering of or failure to render professional services. In interpreting the scope of this exclusion, many courts look to the definition of professional services given by the Nebraska Supreme Court in 1968: “The act or service must be such as exacts the use or application of special learning or attainments of some kind… A ‘professional’ act or service is one arising out of a vocation, calling, occupation, or employment involving specialized knowledge, labor, or skill, and the labor or skill involved is predominantly mental or intellectual, rather than physical or manual.” 1 Some courts have applied the professional services exclusion more broadly to also include claims arising out of unskilled tasks as long as they were integral to the operations of the insured’s profession. Professional service providers typically have a separate errors and omissions policy to shield themselves from professional liability.
Other Exclusions
CGL policies generally exclude additional liability categories that are covered under other types of insurance. These include workers’ compensation claims and vehicle claims, which are covered under workers’ compensation and vehicle insurance policies, respectively.
If you are involved with a dispute with your business insurance company, contact Schwartz, Conroy & Hack, PC. We have the expertise, experience and tenacity to make insurance companies keep their promises to you and your business.
1 Marx v. Hartford Accident & Indemnity Co., 183 Neb. 12, 157 N.W.2d 870 (1968).
