Commercial General Liability Insurance

What is Commercial General Liability Insurance?

Commercial General Liability Insurance, also known as Comprehensive General Liability Insurance, offers protection against the legal liability of businesses for any damage caused to a third party by their products and operations. This insurance provides coverage to a business in cases of third-party bodily injuries, property damages, and personal injuries. The company can claim the insurance to compensate the claimant for the losses resulting from its products, ongoing or completed operations, or any accident on its business premises. 

Commercial General Liability policies are a part of the legal norms in the UAE. These plans provide comprehensive liability coverage to the insured and encompasses different liability coverages in the same plan. It includes third party’s property coverage, medical expenses coverage, personal and advertising injury coverage. Additionally, the policy provides coverage for Bodily Injury/Personal Disability (BI/PD) claims arising from completed operations and products that are either manufactured, distributed, or sold by the insured.

Coverage for expenses related to product recall, product guarantee and respective third party financial loss is also provided under a CGL policy. Essentially, a CGL policy can be considered a mix of public and product liability insurance. However, a CGL policy comes with a host of valuable coverages that are not available elsewhere. 

As per the UAE laws for companies operating in Free zones, public liability insurance and employer's liability insurance is mandatory - for some companies, a comprehensive CGL policy is mandatory. 

Who Needs Commercial General Liability Insurance?

Companies that have third party presence and pose a risk of third party property damage or bodily injury (BI/PD) in their premises (commercial tenants, hotels, and so on), are into a manufacturing business, operate from an office, or carry out installation or civil projects, require a CGL policy. 

The following are some major categories of businesses that can benefit from a CGL policy - 

• Companies operating from an office
• Hospitality
• Civil construction 
• Real Estate
• Product manufacturers and distributors

Why Get Commercial General Liability Insurance?

Besides its mandatory status for companies operating in the Free zones and some mainland areas, CGL insurance offers the following benefits - 

• Helps in complying with contractual and legal obligations
• Provides peace of mind and a war chest to take care of legal liabilities 
• Helps in managing commercial risks more effectively
• Improves credibility and helps in getting more business in international jurisdictions

Common Risk Scenarios in Commercial General Liability Insurance 

• Third party property damage lawsuits filed by a landlord against a tenant.
• In case a tourist at a hotel falls, incurs serious injuries, and files a bodily injury lawsuit after returning to their domicile country later.
• Advertising lawsuit arising from an act of copyright infringement filed by a third party.
• Payment of medical expenses to injured third parties.
• Bodily injury and property damage claim filed against an installation company in case a piece of heavy equipment falls during the process and causes injuries or damages to passerby.
• Bodily injury claim filed by relatives of victims arising from the collapse of a bridge against the contractor and developer.
• Product liability lawsuit filed by a cell phone user against the manufacturer if it explodes and injures the user.
• Product recall claim filed by an EV maker for recalling a batch of EV arising from detection of a defect in lithium batteries installed.
• Product recall claim filed by the insured due to a suspected bodily injury threat/error from a batch of vehicles exposed via a routine test.

Major Inclusions of Commercial General Liability Insurance

Commercial General Liability Policy offers general coverage to business organisations and industries for - 

• Coverage for Premises Liabilities: Insurance for accidents happening within the organisation’s premises.
• Operations Liability Coverage: Coverage for operations causing any third-party damage. 
• Products/Completed Operations Liability Coverage: For sold products and completed business operations resulting in third-party damage. 
• Coverage for Defence Costs: Defence costs, including legal expenses, lawyer's fees, and court charges are also included.

Major Exclusions of Commercial General Liability Insurance

The following are the major exclusions of Commercial General Liability Insurance - 

• Aircraft, Hovercraft, Aircraft Products, and Watercraft: Any operation or use of aircraft, hovercraft, and watercrafts resulting in bodily injury or property damage is excluded under a Commercial General Liability Insurance Policy.
• Contractual Liability: A CGL Insurance Policy does not include the liability of the insured party in the case it participates in any contract.
• Fraudulent, Criminal, Wilful, or Dishonest Operations: A Commercial General Liability Insurance Policy would not provide coverage if the business organisation is found to be involved in any fraudulent, criminal, wilful, or dishonest activity. 
• Asbestos: The Commercial General Liability Insurance Policy excludes any liability arising from the asbestos industry and products.
• Electronic Data: The Commercial General Liability exclusions include all liabilities arising from electronic data handling such as 
  • Partial or complete Electronic Data distortion, destruction, erasure, alteration, corruption, misappropriation, and misinterpretation
  • Displaying, distributing, dealing in, or publishing any sensitive Electronic Data
  • Any mishandling or error in creating, entering, amending, or deleting Electronic Data
• Employee Injuries: The CGL policy does not cover the company's employees for Bodily Injury or Property Damage - it only includes third-party damages. 
• Faulty or Incomplete Work: Any faulty or incomplete work is exempted from the CGL policy. 
• Owned Property: A Property owned by the Insured Party itself is not included in the Commercial General Liability Insurance coverage. 
• Professional Liability: Any professional liability is excluded from the CGL insurance policy. 
• Product Recall: A CGL policy does not pay for the withdrawn or recalled products from the market due to any defect or deficiency. 
• War: Commercial General Liability coverage excludes damages caused by invasions, hostilities, war, foreign enemy attack, mutiny, civil war, insurrection, revolution, and rebellion. 

Pricing of a Commercial General Liability Insurance Policy 

Here are the major factors that affect the price of a Commercial General Liability Insurance plan - 

• Location of the business
• Geographical revenue split
• Past claim experience
• Nature of business
• Nature of clients and the industry they belong to
• Type of product manufactured with specifications (for product liability)
• Product recall plan

General liabilities, whether arising from the services or products, can cause significant distress to an organisation in the form of liability settlement, disruption of business activity, and more. A Commercial General Liability policy can be considerably helpful here, as it can cover the major expenses and minimise the financial costs for your company in such cases.. 

Policybazaar UAE understands the importance of a customised insurance plan for financial security and managing expenses amidst uncertainties. With our world-class and cost-efficient risk management strategies and solutions through insurance, you can enjoy peace of mind and focus on achieving your goals without being obstructed by any adversity.