What Does CGL Insurance Cover for Small Businesses?
A clear breakdown of what’s protected, what’s excluded, and why it matters for day-to-day operations
Running a small business often means wearing multiple hats. You serve customers, manage operations, and stay on top of finances. But one unexpected accident, complaint, or mishap can expose you to significant liability. That is why Commercial General Liability (CGL) insurance is one of the most important protections you can have in place.
CGL is not about covering everything. It is about defending your business when a third party holds you responsible for something that goes wrong. Understanding what this coverage includes helps you protect your business from avoidable financial and legal setbacks.
Core Protections in a Standard CGL Policy
CGL insurance focuses on third-party claims. This means it covers situations where someone outside your business, like a customer, vendor, or passerby, suffers an injury or loss and believes your business is to blame.
Here is what is typically covered:
-
Bodily injury: If someone trips on your premises and requires medical attention.
-
Property damage: If your operations cause damage to a client’s or public property.
-
Personal injury: If your advertising or communications result in a libel or slander claim.
-
Advertising injury: If a competitor alleges that your marketing misuses their brand or infringes copyright.
-
Legal defence and settlements: If a lawsuit is filed, your policy covers legal costs, court fees, and settlement amounts up to your coverage limit.
Note: This coverage applies only when the incident occurs due to negligence, error, or accident. It does not cover intentional harm or criminal activity.
Common Real-World Scenarios for Small Businesses
Even a business without a storefront can face liability. These situations demonstrate how CGL applies in everyday operations:
-
A client visits your home-based office and slips on wet stairs.
-
You are delivering a product and accidentally damage the client’s flooring.
-
Your website copy mistakenly uses copyrighted language from a competitor.
-
A subcontractor blames you for a delay caused by a misunderstanding on-site.
| Covered Situation | CGL Category | What the Policy Typically Covers |
|---|---|---|
| Customer injury in your workspace | Bodily injury | Medical bills, legal fees, potential damages |
| Damage to client property during a visit | Property damage | Repair or replacement costs |
| Social media post leads to a defamation claim | Personal or advertising injury | Legal defense, settlement if needed |
| Slip-and-fall at a trade show booth | Bodily injury | Third-party injury costs and liability defense |
Caution: CGL does not protect against everything. It will not cover mistakes in your work, damage to your own property, or injuries to employees. Those require other forms of insurance such as Errors and Omissions, commercial property coverage, or workers’ compensation.
Why It Matters for Small Businesses
Small businesses often operate with limited reserves. Even one liability claim can severely strain cash flow or force a business to close. CGL provides the peace of mind to:
-
Welcome clients into your space
-
Visit client locations without fear of damaging property
-
Promote your brand without legal risk from mistaken advertising
-
Partner with vendors who require proof of liability coverage
Tip: Many commercial landlords, event organizers, and clients require CGL before signing contracts or allowing participation. Having a policy in place can make your business more credible and contract-ready.
Coverage Limits and Customization
Most policies start at $1 million per occurrence, with options to increase limits based on your industry, location, or contract requirements. Small businesses can often bundle CGL with other coverages such as professional liability or business interruption insurance.
CGL is also customizable. You can add endorsements for special risks like non-owned auto liability, product liability, or tenants’ legal liability depending on how your business operates.
CGL Helps You Stay Focused on Growth, Not Lawsuits
Your time is better spent building your business than worrying about legal fees or accident claims. CGL insurance protects against many of the everyday liabilities that come with working in public, visiting clients, or operating a space. For a small business, it is not just practical — it is essential.