What Is Commercial General Liability (CGL) Insurance and Who Needs It?
Understanding what it covers, how it protects your business, and when it becomes essential
Running a business means taking risks — but not all risks are within your control. Accidents happen. Property gets damaged. People get injured. That’s where Commercial General Liability (CGL) insurance steps in.
CGL insurance forms the foundation of protection for most businesses. Whether you’re a consultant working from home or a contractor on construction sites, CGL helps shield you from the financial fallout of unexpected claims. Without it, a single lawsuit could derail your operations, reputation, or long-term growth.
What CGL Insurance Covers
CGL insurance provides protection against third-party liability claims. This means it covers situations where your business is held responsible for injury or damage to someone else — not your employees or your own property, but your customers, clients, or the general public.
Standard coverage includes:
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Bodily injury: A client slips on your office floor and breaks a wrist.
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Property damage: Your employee accidentally damages a customer’s equipment during an on-site visit.
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Personal injury: A competitor sues you for libel or slander based on a social media post.
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Advertising injury: Your promotional materials are accused of infringing on someone else’s copyright or trademark.
Note: CGL does not cover everything. It won’t protect you against professional errors (you need professional liability for that), employee injuries (that’s workers’ compensation), or damage to your own property (covered by commercial property insurance).
Who Needs CGL Insurance?
CGL is recommended for most businesses, regardless of size or industry. If you interact with the public, rent a space, or deliver services off-site, you’re exposed to liability risks.
You should strongly consider CGL insurance if:
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You operate a physical location open to customers or clients
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You attend trade shows or perform services at client locations
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You manufacture, distribute, or sell physical products
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You are contractually required to carry liability insurance
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You advertise your services online, in print, or through media
| Business Type | Risk Example | CGL Relevance |
|---|---|---|
| Retail store | Customer slips in the aisle | Yes — covers bodily injury claims |
| Marketing consultant | Accused of plagiarism in an ad campaign | Yes — personal and advertising injury coverage |
| Contractor or tradesperson | Breaks a client’s window while working | Yes — property damage coverage |
| Software developer (remote) | Limited physical risk to others | Possibly — depends on contract requirements |
| Manufacturer | Product causes damage after sale | Yes — product liability is often included |
Caution: Many commercial leases, vendor contracts, and partnership agreements require proof of CGL insurance. Failing to carry it can limit your ability to work with larger companies or public agencies.
How Much Coverage Do You Need?
Most policies offer coverage limits starting at $1 million, which may sound like a lot — until you’re facing legal fees, medical expenses, and potential settlement costs. Higher-risk industries may require $2 million or more, particularly if third-party injuries or damages are likely.
Factors that influence how much coverage you need include:
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The nature of your work and your exposure to public traffic
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Whether you work on client premises
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The value of the contracts or clients you work with
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Requirements from landlords, partners, or regulatory bodies
Tip: Don’t underestimate the risk of a single lawsuit. Even unfounded claims can cost tens of thousands of dollars to defend. CGL gives you legal defense coverage as well as potential settlement support.
Why CGL Is Often the First Policy a Business Buys
Many new businesses purchase CGL before anything else. It’s often the minimum standard required to operate safely, rent commercial space, or win client trust. It’s also one of the most affordable forms of coverage relative to the protection it offers.
CGL Insurance Lets You Operate With Confidence
If you’re building a business, you’re building something valuable — and that means protecting it from setbacks that could arise through no fault of your own. Commercial General Liability insurance gives you the ability to serve customers, sign contracts, and operate in public spaces knowing that a single accident or accusation won’t undo all your hard work.