· General Liability Insurance market's gross written premium projected to reach US$0.57 billion in 2023.
· Anticipated annual growth rate (CAGR 2023-2028) of 6.20%, resulting in a market volume of US$0.77 billion by 2028.
· Average spending per capita in the market estimated at US$0.40 in 2023.
General Liability Insurance (GLI) intends to safeguard you against costs involving legal issues, settlements, and damages if you or your business is held responsible for causing harm to others. This insurance is vital for protecting individuals and businesses from the financial liabilities resulting from their actions. Further, it covers them against the incidents or accidents that take place on their premises.
In general, GLI covers business-related claims involving bodily injury or property damage. Also referred to as the business liability insurance or commercial general liability insurance or comprehensive general liability (CGL), it is available both as a standalone policy and in combination with other key coverages through a Business Owner’s Policy (BOP).
What does GLI generally cover?
It covers both the product and the public liability:
1. Product-Related Injury:
General Liability Insurance provides financial coverage if your company's products are deemed responsible for bodily harm to a third party.
2. Property Damage:
The policy covers third-party property damages resulting from your company's products or services.
3. Personal Injury
General liability insurance safeguards you against personal injuries suffered by a third party, encompassing issues like defamation and wrongful entry.
4. On-Premises Injury:
CGL insurance offers coverage if a customer or client sustains an injury while on your company premises.
5. Advertising Injuries Protection:
The policy provides coverage if your company is held liable for customer losses due to miscommunication, such as copyright issues, incorrect warnings, or unclear usage guides.
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6. Completed Operations Extension:
Some CGL policies extend coverage beyond project completion. For instance, if a construction company faces liability for damages post-construction, the policy covers related costs.
7. Medical Expenses
General liability insurance covers medical expenses associated with the treatment of a third party physically injured by your business.
Additionally it is important to note that:
· Businesses, homes, and auto insurance policies are not covered by general liability insurance.
· It doesn't protect against expenses for injury or property damage caused by products, services, or premises.
· Examples of coverage include injuries on business premises due to alleged negligence.
Let’s discuss the exclusions in detail:
What is not covered in GLI?
1. Employee Injury Exclusions:
This insurance does not cover bodily injury to an employee of the insured under the following circumstances:
· While engaged in employment by the insured.
· While performing duties related to the conduct of the insured's business.
Furthermore, this insurance also excludes coverage for bodily injury to the brother, child, parent, sister, or spouse of such an employee as a result of any injury described in the above points. These exclusions apply regardless of the insured's liability as an employer or in any other capacity.
2. Employment-Related Practices
This insurance does not apply to damages, losses, costs, or expenses sustained by any person arising from any employment-related act, omission, policy, practice, or representation directed at that person.
This includes but is not limited to actions such as:
· Arrest, detention, imprisonment, and related actions
· Humiliation, prosecution, retaliation, and defamation etc
· Evaluation, discrimination, harassment, and segregation
· Eviction, invasion, violation of occupancy rights, and failure
· Refusal to advance, compensate, employ, promote, make statutory payments, or other contributions, invasion, or violation of privacy or publicity
· Termination of employment, change in terms or conditions of service, or any other employment-related act, omission, policy, practice, representation, or relationship in connection with any insured.
Additionally, this insurance does not cover damages, losses, costs, or expenses sustained by the brother, child, parent, sister, or spouse of such a person as a consequence of any employment-related act, omission, policy, practice, or representation directed at them.
3. Improvement, Maintenance, or Prevention Expenses:
This insurance doesn't cover any expenses incurred for enhancing or maintaining property, or for preventing injury or damage to people, organizations, or property owned, rented, or occupied by the insured.
4. Expected or Intended Injury or Damage:
This insurance excludes coverage for bodily injury or property damage resulting from an act intended by the insured or expected by a reasonable person in the insured's circumstances to cause harm. However, this exclusion doesn't apply if the injury or damage results from the use of reasonable force to protect persons or tangible property.
5. Intellectual Property Laws or Rights:
This insurance doesn't apply to bodily injury or property damage resulting from an alleged infringement of intellectual property laws or rights by any person or organization, regardless of whether the insurance would otherwise apply.
6. Mobile Equipment Transportation:
Bodily injury or property damage arising from the transportation of mobile equipment by a motor vehicle owned, operated, loaned, or rented to any insured is not covered by this insurance.
7. Multiplied or Punitive Damages, or Penalties:
This insurance doesn't cover exemplary or punitive damages, fines, penalties, or any multiple portion of a multiplied damages award.
8. Nuclear Energy:
Damages, loss, cost, or expense arising from ionizing radiation, contamination by radioactivity, or the hazardous properties of explosive nuclear assemblies or components are not covered by this insurance.
9. Pollution:
This insurance excludes damages, loss, cost, or expense resulting from the actual, alleged, or threatened discharge, dispersal, seepage, migration, release, or escape of pollutants.
Additionally, this insurance doesn't cover damages, loss, cost, or expense resulting from any demand, order, request, or regulatory or statutory requirement for testing, monitoring, cleanup, removal, containment, treatment, detoxification, or neutralization of pollutants. It also excludes any claims or proceedings by or on behalf of a governmental authority or others for damages related to the effects of pollutants, regardless of the nature or cause of pollution.
10. Professional Liability:
This insurance doesn't cover damages, loss, costs, or expenses arising from providing or failing to provide professional services or advice. This applies regardless of whether the service or advice is typical for the insured's profession, and it doesn't matter if a claim or lawsuit is filed by a client or any other person or organization.
11. Progressions of Known Injury or Damage:
This insurance does not apply to bodily injury or property damage that is a change, continuation, or resumption of any injury or damage known before the policy period began.
12. Recall of Products:
This insurance does not cover damages claimed for loss, costs, or expenses incurred for the withdrawal, recall, inspection, repair, replacement, adjustment, removal, or disposal of the insured's product or any property containing the product.
13. Terrorism:
This insurance excludes damages, loss, costs, or expenses arising from an act of terrorism.
“An act of terrorism is defined as an act committed for political, religious, ideological, or similar purposes, intending to influence any government or put the public or any section of the public in fear, involving the use of force or violence or the threat thereof.”
Examples of General Liability Insurance (GLI)
Slippery Floors Incident: If a customer slips and breaks a leg on recently cleaned and polished floors in a business, a Commercial General Liability policy could cover the costs of hiring lawyers to defend the company or settling the claim.
Electrical Company Accident: In the case where an employee of an electrical company accidentally causes a fire during a wiring job at a customer's home, CGL insurance might cover the expenses associated with legal defense or settlement.
Advertising-Related Claim: If a business's advertisement results in someone claiming libel or slander, a Commercial General Liability policy could help cover the costs of legal representation and settlements.
Case Studies Related to GLI
Shivram Chandra Jagarnath Cold Storage and Ors.v. New India Assurance Company Limited and Ors. I(2022)CPJ138(SC)
In this instance, the insured filed a claim under a Deterioration of Stock Policy, specifically covering the stock of potatoes stored in cold storage. However, upon examination, the surveyor recommended rejecting the claim based on policy exceptions. Consequently, the insurer disclaimed any liability. The Supreme Court delved into the significance of exceptions within an insurance policy, emphasizing that insurers aim to indemnify against losses caused by specific perils under normal conditions with statistically estimated effects.
The Court clarified that exceptions serve to exempt the insurer from liabilities it would otherwise bear. These clauses are inclusively inserted in insurance policies to communicate to the insured that losses attributed to excepted causes will not be indemnified. In this case, as the exception neither overly broad nor conflicting with the insurance policy's primary purpose, the insurer's repudiation of the claim was deemed appropriate. The decision took into account the specific exceptions outlined in the policy, reinforcing the insurer's right to reject claims associated with the excepted causes.
Why General Liability Insurance is Important
General Liability Insurance (GLI) is crucial for businesses because it protects against the financial impact of liability claims. About 4 out of 10 small businesses are likely to face liability claims in the next decade. Without GLI, these expenses could strain or even lead to the closure of your business.
Additionally, when working with other businesses, proof of insurance in the form of a certificate is often required. Many companies need this assurance before engaging in partnerships or collaborations. Therefore, having GLI not only protects your business but also opens doors to potential opportunities by meeting the insurance requirements of partnering entities.
In the nutshell
Even though every business is distinct, the essential need for general liability coverage is universal. Whether your business is large or small, and regardless of your industry, having General Liability Insurance (GLI) is advantageous.
With a team of experts and a track record of assisting prominent business owners, BimaKavach is well-equipped to collaborate with you in customizing a policy that suits your specific requirements.
Whether you are exploring general liability coverage, determining the appropriate general liability class code for your business, or navigating the claims process, our seasoned specialists are ready to help. Our dedication to customer satisfaction is evident in consistently high scores in general liability insurance reviews, assuring you that we prioritize the protection of your business.
Take a proactive approach to safeguard your small business by obtaining a general liability insurance quote today. Learn how our expertise can play a crucial role in ensuring the well-being of your business in the face of potential liabilities.
Frequently Asked Questions
1. Can GLI be used to cover damages caused by products, services, or premises?
No, GLI does not protect against expenses for injury or property damage caused by products, services, or premises. It is essential to understand the specific coverage provided by GLI.
2. Can GLI be used for employee injuries?
GLI generally does not cover bodily injury to employees under specific circumstances, including when engaged in employment or performing duties related to the insured's business.
3. Why is GLI important for businesses?
GLI is crucial as it protects businesses from the financial impact of liability claims. Without it, the costs of legal defense and settlements could strain or even lead to the closure of a business. Additionally, proof of GLI is often required when collaborating with other businesses.
4. Can GLI provide coverage beyond the completion of a project?
Yes, some GLI policies offer a completed operations extension, which extends coverage beyond project completion. For instance, it could cover liability for damages post-construction for businesses like construction companies.
5. How does GLI handle exclusions related to known injuries or damages?
GLI excludes coverage for progressions of known injuries or damages, ensuring that changes, continuations, or resumptions of known issues before the policy period began are not covered.
6. Why is it important to obtain a GLI quote proactively?
Obtaining a GLI quote proactively helps businesses understand the potential costs and benefits, providing insights into how GLI can be a vital asset in protecting against liabilities.
7. How does GLI handle claims related to employment practices?
GLI excludes coverage for damages arising from employment-related acts, omissions, policies, practices, or representations. This includes various actions like discrimination, harassment, termination, and related issues.
8. Does GLI protect against intentional acts causing harm?
GLI excludes coverage for bodily injury or property damage resulting from intentional acts intended by the insured or expected by a reasonable person to cause harm. However, reasonable force to protect persons or property is an exception.
9. How does GLI address intellectual property claims or rights violations?
GLI does not apply to bodily injury or property damage resulting from alleged infringement of intellectual property laws or rights by any person or organization, regardless of whether the insurance would otherwise apply.
10. How does GLI handle multiplied or punitive damages, fines, or penalties?
GLI does not cover exemplary or punitive damages, fines, penalties, or any multiple portion of a multiplied damages award. It is designed to address compensatory damages rather than punitive measures.
References:
https://www.linkedin.com/pulse/case-study-product-liability-kanchan-nayek
https://www.lexology.com/library/detail.aspx?g=e7917e90-9b84-4997-a31d-363954df6954
