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Commercial general liability insurance is a type of coverage for businesses that financially protect their owners from third-party claims.
Let’s say a customer is injured at your store, or you damage a client’s property at your office. If those individuals bring a lawsuit against your business, commercial general liability insurance would help cover the legal costs of defending your business in court. If you lose that lawsuit, and a court rules you owe your client or customer damages, this type of insurance typically covers those damages as well.
Commercial general liability insurance typically covers the legal costs and damages associated with certain types of claims. These coverage areas include:
Like business insurance, commercial general liability insurance is not mandatory in Canada. However, it is highly recommended for all businesses. Accidents can matter in a matter of seconds, but they could spur claims that take a long time to resolve — and financially recover from. Legal fees and damages can run extremely high.
We strongly recommend commercial general liability insurance coverage for all businesses, no matter how big or small. Interacting with third parties — whether that be customers, clients, vendors, suppliers, or even other businesses — is a critical part of running any business, but it also necessarily exposes you to a wide range of third-party claims.
Having a commercial general liability insurance policy in place is especially wise if you frequently interact with clients, either on your commercial property, in your home, or at their homes. This type of coverage is also recommended if you have employees who perform work off-site on property you don’t own.
Some types of claims are not covered by this type of insurance. These include:
Other types of claims are not covered by commercial general liability insurance, but are covered by other types of policies instead:
The exact cost of a commercial general liability insurance policy depends on a variety of factors like the industry you’re in and the number of years your business has been operating. In general, though, small to medium-sized businesses can expect to pay about $450 per year on a policy with a $2 million limit.
When it comes to determining your general liability insurance rates, several factors come into play. Understanding these can help you better manage and anticipate your insurance costs. Let's take a closer look at these key factors:
When looking for a commercial general liability insurance policy, you’ll want two things: a plan that meets the unique needs of your business, and a competitive rate.
The best strategy for finding the right plan for you is twofold. First, get a good understanding of the specific risks you’re exposed to, given your industry and your unique business operations. When you overinsure your business, you unnecessarily raise your premiums. At the same time, underinsuring your business can expose you to financial losses.
The second step is to compare offers by different insurance companies. At RATESDOTCA, we’ve come up with an easy, streamlined process to help you find the best coverage at the best price. Here’s how it works:
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Public liability insurance is another type of coverage for businesses. It offers financial protection when third parties file claims against your business for bodily injury or property damage.
If that sounds similar to commercial general liability insurance, that’s because it is. The two types of insurance overlap: they both cover expenses associated with covering bodily injury or property damage claims. This type of coverage is critical if your business is one that frequently interacts with the public — e.g., service providers, retail stores, or food vendors.
Where the two types of insurance differ is scope. Commercial general liability insurance covers a much broader range of claims than public liability insurance. In addition to claims of bodily injury or property damage, commercial general liability insurance also covers other risks. These include claims related to personal and advertising injury liability, product liability, and tenant's legal liability.
In contrast to public liability insurance, commercial general liability insurance also comes with higher coverage limits. Business owners can also customize the latter with a range of endorsements, so they can attend to specific business needs.
In general, larger companies or businesses that are more likely to face a wide range of liabilities would be best served by commercial general liability insurance. The coverage provided by public liability insurance may be sufficient for a smaller business, but the best way to ensure your business is adequately protected from third-party claims is to speak to a broker.
The amount of general liability insurance coverage you need depends on several factors, including the size of your company and the range of risks common in your line of business. It is critical to get a realistic sense of the types of third-party claims you are exposed to given your industry and business operations, so you neither over- or underinsure your business.
If you need help, an experienced broker will be able to guide you to a variety of policies suited to your needs.
This type of coverage offers protection against claims by third parties — a term that generally encompasses clients, customers, vendors, or other businesses who can file lawsuits or other claims against your business.
Commercial general liability insurance does not protect you from claims against your business filed by employees or subcontractors. Employees and subcontractors are not considered third parties for the purposes of coverage.
Jessica Mach is a freelance writer for RATEDOTCA. She is Canada Editor - Law for Key Media’s legal publications, and previously reported on US labour policy for Law360, Law.com, and the Los Angeles Daily Journal. As an early member of LowestRates.ca's editorial team, she covered personal finance and astrology.
She graduated from McGill University with a Master of Arts degree in art history.
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