Key takeaways
- Commercial general liability is the base liability layer covering third-party bodily injury, property damage, and advertising injury, but not your own property, vehicles, employees, or professional errors.
- A $1 million per occurrence and $2 million aggregate structure is common but not required, and several small claims can exhaust the aggregate in a single policy year.
- A certificate confirms CGL is in force but not additional insured status, which depends on the actual policy endorsement, not the box on the ACORD 25.
- Advocate's Coverage Gap Analysis reviews a CGL policy against the coverage standard for its risk and surfaces coverage gaps, audit risk, and E&O exposure.
What is commercial general liability insurance?
Commercial general liability insurance, usually shortened to CGL or general liability, pays for the third-party bodily injury, property damage, and personal and advertising injury a business becomes legally liable for. It responds to the everyday liability exposures a business faces, such as a customer injured on the premises, damage a business causes to a third party, or a claim of libel or slander in its advertising.
CGL is the base liability layer on nearly every commercial policy, and it is the coverage most third parties look for on a certificate of insurance. It does not cover the business's own property, its vehicles, its employees, or a professional error. Those exposures sit on separate policies, which is why a complete program pairs CGL with property, auto, workers compensation, and often professional or cyber coverage.
What a CGL policy covers, and what it does not
A standard CGL policy covers three kinds of claim. It pays for the bodily injury and property damage a business causes a third party, for personal and advertising injury such as libel, slander, or copyright infringement in advertising, and for medical payments for minor third-party injuries regardless of fault. It also pays defense costs, which on most CGL forms are outside the limit rather than eroding it.
What a CGL policy excludes is just as important. It does not cover a business's own buildings or contents (that is commercial property insurance), its vehicles (commercial auto), injuries to its own employees (workers compensation), a professional mistake (errors and omissions), or a data breach (cyber insurance). Reading a CGL policy well means knowing which claims land elsewhere.
Common exclusions, and where the risk is covered instead
Typically excluded | Where it is usually covered |
|---|---|
Bodily injury to your own employees | A workers compensation and employers liability policy, which is the mechanism for injuries to employees arising out of their employment |
Ownership or use of autos, aircraft, and watercraft | A commercial auto policy for owned and hired vehicles, with aircraft and watercraft written on their own separate policies |
Damage to property you own, rent, or occupy | A commercial property policy for the business's own buildings and contents |
Loss of, or damage to, electronic data | A cyber policy, which covers data loss and the breach costs a CGL leaves out |
Pollution and clean-up of released contaminants | A standalone environmental or pollution liability policy |
Liquor liability for a business that manufactures, sells, or serves alcohol | A standalone liquor liability policy for the alcohol exposure |
Damage to your own product or completed work (faulty workmanship) | Generally not an insurable transfer; addressed through workmanship warranties and contract terms |
What a standard cgl form leaves out, and the coverage that picks it up.
Exclusions vary by form and endorsement. Confirm the actual policy wording.
How CGL limits are structured
Limit | What it caps |
|---|---|
Each occurrence (commonly $1M) | The most the policy pays for any single claim or occurrence |
General aggregate (commonly $2M) | The most the policy pays in total across the policy period, other than products-completed operations claims, which have their own separate aggregate |
Products-completed operations aggregate | A separate cap for claims from finished work or products |
Personal and advertising injury | A per person or organization cap for libel, slander, and advertising claims |
Damage to premises rented to you | A sublimit for fire or other damage to a rented space |
Medical payments | A small per-person sublimit for third-party medical costs, no fault required |
The limits that make up a standard commercial general liability policy.
The 1 million dollar per occurrence and 2 million dollar aggregate structure is common, not universal or required. The right limit depends on the risk and on any contract or lease that sets a minimum.
Per occurrence versus aggregate, explained
The two headline CGL limits do different jobs. The per-occurrence limit is the most the policy will pay for a single claim. The general aggregate limit is the most it will pay in total across the whole policy period, no matter how many claims arrive. A policy written at 1 million dollars per occurrence and 2 million dollars aggregate can pay up to 1 million on any one claim and up to 2 million across the term.
This matters because a business with several claims in one year can exhaust the aggregate even when no single claim hit the per-occurrence limit. When that happens the policy stops responding until it renews, which is one of the reasons higher limits are often carried above the CGL through a commercial umbrella.
Where CGL sits in the coverage tower
CGL is the primary layer of a liability program. Above it, a commercial umbrella or excess liability policy adds limit that responds once the underlying CGL, commercial auto, or employer liability limit is exhausted. Together they form the coverage tower a broker builds to match the risk a business carries.
This is why CGL limits are rarely read alone. A 1 million dollar per-occurrence CGL under a 5 million dollar umbrella behaves very differently from the same CGL with no umbrella at all. Benchmarking the whole tower against the standard for the risk is how you tell whether the structure holds.
CGL on the ACORD 25 and additional insured status
CGL is the coverage most contracts and leases require a business to carry and to evidence on an ACORD 25 certificate of insurance. The certificate shows the per-occurrence and aggregate limits, and it often has to name the other party as an additional insured, which extends the CGL to cover that party for claims arising out of the insured's operations.
Confirming CGL on a certificate is not the same as confirming the coverage. A certificate is a snapshot, and an additional insured status depends on the actual endorsement on the policy, not the box on the form. Advocate reads the policy behind the certificate, so certificate of insurance tracking checks the endorsement itself rather than trusting the paper.
How to tell if your CGL limits are enough
A CGL limit on its own carries no verdict. The way to tell whether 1 million and 2 million are enough is to compare the policy against the coverage standard for the same risk, holding the exposure constant, and against any minimum a contract or lease sets. That comparison is a coverage gap analysis, and it is what turns a limit from a number into a decision.
Advocate benchmarks a CGL policy against the standard for its risk through Coverage Gap Analysis, flagging thin limits, missing endorsements, and coverage gaps across the program. This is general guidance, not legal or coverage advice. Verify the actual policy, its endorsements, and any contract requirement.
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FAQ
Frequently asked questions
What is commercial general liability insurance?
Commercial general liability insurance, or CGL, covers the third-party bodily injury, property damage, and personal and advertising injury a business is legally liable for. It is the base liability layer on nearly every commercial policy and the coverage most third parties look for on a certificate of insurance. It does not cover the business's own property, vehicles, employees, or professional errors.
How can I tell if my CGL policy has a coverage gap?
Compare it against the coverage standard for the same risk, holding the exposure constant, and against any contract or lease minimum. Advocate benchmarks a CGL policy against that standard through Coverage Gap Analysis, flagging thin limits, missing endorsements such as additional insured, and gaps across the program before they become a claim.
What are standard CGL limits?
A common structure is 1 million dollars per occurrence and 2 million dollars general aggregate, often with a separate products-completed operations aggregate. Those figures are typical rather than universal or required. The right limit depends on the risk the business carries and on any minimum a contract or lease sets.
What is the difference between per occurrence and aggregate limits?
The per-occurrence limit is the most a CGL policy pays for any single claim. The aggregate limit is the most it pays in total across the policy period. A business with several claims in one year can exhaust the aggregate even if no single claim reached the per-occurrence limit, at which point the policy stops responding until renewal.
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What does commercial general liability insurance not cover?
CGL excludes the business's own buildings and contents (commercial property insurance), its vehicles (commercial auto), injuries to its own employees (workers compensation), professional mistakes (errors and omissions or professional liability), and data breaches (cyber insurance). Those exposures each sit on a separate policy.
Is $1M / $2M enough general liability coverage?
It depends on the risk and on any contract requirement. Many small and mid-size businesses carry 1 million per occurrence and 2 million aggregate as a baseline, then add a commercial umbrella for higher limits. The way to tell is to benchmark the policy against the coverage standard for the same risk rather than to assume the common figure fits.
What is products-completed operations coverage?
It is the part of a CGL policy that covers bodily injury or property damage arising out of a business's finished products or completed work, after the work is done and away from the premises. It carries its own separate aggregate limit, so it is not drawn down by ordinary premises claims.
What is personal and advertising injury coverage?
Personal and advertising injury is the CGL coverage for offenses such as libel, slander, false arrest, wrongful eviction, copyright infringement in advertising, and use of another's advertising idea. It has its own per person or organization limit within the CGL policy and is separate from bodily injury and property damage.
Does CGL cover professional mistakes?
No. CGL excludes liability arising out of a professional service or advice. That exposure is covered by professional liability, also called errors and omissions insurance, which is a separate policy. A business that gives advice or performs a professional service usually needs both.
What is an additional insured on a CGL policy?
An additional insured is a party added to a CGL policy by endorsement so the policy also covers them for claims arising out of the named insured's operations. Contracts and leases often require it. Whether the status actually exists depends on the endorsement on the policy, not the box checked on a certificate of insurance.
Do CGL defense costs erode the limit?
On most standard CGL forms defense costs are paid in addition to the limit, so they do not erode the amount available to pay a claim. Some forms, particularly on professional or specialty lines, are written with defense inside the limit. Reading which applies is part of confirming the coverage, not just the certificate.
How is commercial general liability insurance priced?
A CGL premium is a rate applied to an exposure base, often sales or payroll, adjusted for the class of business, the limits, the deductible, and the loss history. Two businesses in the same class can pay very different premiums because one carries more exposure. Benchmarking the premium against the market is how you tell whether the price is in line.
Is general liability the same as a business owner policy (BOP)?
No. A business owner policy bundles CGL together with commercial property coverage into one package for eligible small businesses. CGL on its own is only the liability piece. A BOP is convenient, but larger or more complex risks are usually written on separate monoline policies instead.
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