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Compare Commercial General Liability Insurance Quotes

Find the best commercial general liability insurance coverage in Canada. Compare and get the best rates.

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Written By Jessica Mach

Freelance Writer
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Reviewed By Shivani Kaul
Content Manager

Updated

What is commercial general liability insurance?

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.

What does general liability insurance cover?

Commercial general liability insurance typically covers the legal costs and damages associated with certain types of claims. These coverage areas include:

  • Bodily injury liability: claims that allege your business operations are responsible for injuries to a third party, or damage to their property.
  • Personal and advertising injury liability: claims that allege your business committed libel, defamation, slander, or false advertising.
  • Product liability: claims that allege a product you sell or supply caused bodily injury or property damage.
  • Tenant’s legal liability: claims that allege you or your employee(s) damaged the space you rent or occupy.

Is general liability insurance mandatory in Canada?

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.

Who needs general liability insurance?

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.

What is not covered by commercial general liability insurance?

Some types of claims are not covered by this type of insurance. These include:

  • Intentional criminal acts
  • Patent infringement
  • Contractual liability

Other types of claims are not covered by commercial general liability insurance, but are covered by other types of policies instead:

  • Claims involving motor vehicles or automobiles. As a business owner, you are generally responsible when your employees inflict damage while operating vehicles on behalf of your business. These types of claims are covered by a separate type of coverage called commercial auto insurance.
  • Claims involving advice or professional services you provide. Let’s say you give a client professional advice that turns out to be inaccurate, or one of your employees injures a customer while providing services on behalf of your company. Commercial general liability insurance won’t cover the legal fees associated with these types of claims. Instead, you’ll have to buy professional liability insurance — also known as errors and omissions insurance.

How much does general liability insurance cost?

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.

Factors that affect your general liability insurance rates

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:

  • Your company’s annual and projected revenue - Insurers often assess your company's revenue to gauge the level of risk they are underwriting. Higher revenue can indicate more transactions or interactions with clients, which might increase the likelihood of claims. Moreover, projected growth can signal future risks, influencing your rates accordingly. It's important for businesses to provide accurate financial forecasts to ensure a fair assessment.
  • The number of employees you have - The more employees you have, the greater the potential for accidents or incidents that could lead to claims. Each employee represents an additional risk, whether through direct interactions with clients or within the workplace itself. Therefore, insurers consider your workforce size when calculating premiums, as more employees generally translate to higher insurance rates.
  • The number of years your business has been in operation - Longevity can be an indicator of stability and experience in managing risks. A business with a longer track record may have established safety protocols and a history of fewer claims, which could lead to more favorable rates. Conversely, newer businesses might face higher premiums due to perceived inexperience and unpredictability.
  • Your industry - Different industries carry different levels of risk. For instance, construction businesses might face higher liability risks than a small consulting firm due to the nature of their work. Insurers analyze the specific risks associated with each industry to tailor their coverage options and rates, ensuring they reflect the potential exposure to claims.
  • The type of building(s) you work in - The physical environment of your business operations can also affect your insurance rates. Buildings with higher safety standards, modern security systems, and compliance with local regulations can lower risk. On the other hand, older buildings or those with safety hazards may increase the likelihood of incidents, leading to higher insurance costs.
  • Previous insurance claims - Your claims history is a critical factor for insurers. A history of frequent or severe claims can signal higher risk, resulting in increased premiums. Conversely, a clean claims history demonstrates effective risk management, potentially leading to more competitive rates. Insurers use this data to predict future claims likelihood and adjust rates to balance their risk exposure.

    By comprehending these factors, you can better navigate the landscape of general liability insurance and take proactive steps to optimize your rates. Each element reflects the insurer's need to understand your business's risk profile and ensure you are adequately covered, providing peace of mind as you focus on growth and success.

How commercial general liability can protect your business

  • Scenario 1: At Sarah’s restaurant, Fig, one of her employees has spilled a bowl of soup in the foyer during the lunch rush, but is called away by a customer before he can clean it up. Another customer enters the restaurant and slips on the spill, significantly injuring his back and leg. This customer sues Sarah’s restaurant for bodily injury and wins.

    Outcome: Sarah’s commercial general liability insurance covers the legal fees associated with defending the customer’s lawsuit in court. The policy also covers the damages the court orders Sarah to pay to the customer. This coverage ends up totalling more than $20,000 — money Sarah would have had to pay out of pocket if she wasn’t insured.
  • Scenario 2: Jasmine’s plumbing company, Ottawa Plumbing Services, Inc., sends a newly hired employee to repair a pipe leak at a client’s home. While performing the job, the employee accidentally makes the leak worse, causing a minor flood in the client’s kitchen. The client sues Toronto Plumbing Services, Inc., alleging the company’s services caused significant damage to her property. A court rules in favour of the client, and awards damages.

    Outcome: Jasmine’s commercial general liability insurance provides more than $35,000 to cover the cost of defending the client’s lawsuit in court, as well as expenses related to repairing the client’s kitchen cabinets, walls, and floors.
  • Scenario 3: Daniel runs an online skincare business, Blemish Free Co., which specializes in products that claim to significantly reduce acne. A customer sues Daniel’s company for advertising injury, alleging its products caused her to break out in hives and that the company engaged in false advertising. The court orders a three-day trial, but the jury ultimately renders a verdict in favour of Blemish Free Co.

    Outcome: Daniel’s commercial general liability insurance covers the legal fees of defending the lawsuit at trial, which totalled more than $20,000. Without his policy, Daniel would have had to pay this amount out of pocket.

How to get the cheapest commercial general liability insurance quotes

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:

  • Tell us about your business by answering a few questions.
  • Compare quotes from different insurance companies side by side — free of charge.
  • Choose the right protection plan for your business.
  • Connect with the insurer and secure your policy.

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Frequently asked questions about commercial general liability insurance

Have more questions? We got them answered...

What is the difference between public liability insurance and general liability insurance?

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.

How do I determine the amount of general liability insurance coverage I need?

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.

What counts as a third party?

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 3.JPG
Jessica Mach ,
Freelance Writer

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.

Experience
  • Business Loans
  • Personal Finance
Education
  • McGill University

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