Just as homeowners in Texas are required to have homeowner’s insurance, business owners must carry commercial general liability (CGL) insurance. This type of insurance protects businesses from third-party claims of bodily injury or property damage. It also covers any legal defense and settlement costs that may arise from these claims. In order to make sure you have the right coverage for your business, it’s important to understand what CGL insurance covers and how it works.
Understanding Commercial General Liability Insurance in Texas?
What Does Commercial General Liability Insurance Cover?
Commercial general liability insurance can cover a variety of different types of claims. Many business owners mistakenly believe that commercial general liability insurance only protects them from third-party accidents, such as someone slipping and falling on their property.
However, there are a number of other exposures that CGL policies protect against. So, what does CGL insurance actually cover? Let’s take a closer look.
If someone is injured on your property or as a result of your product or service, CGL insurance can help cover medical expenses, lost wages, and even pain and suffering damages.
If someone's property is damaged as a result of your business operations, CGL insurance can help cover the cost of repairs or replacement.
Personal and advertising injury
This type of coverage protects you from claims of defamation, slander, or copyright infringement. It can also help cover the cost of any legal defense that may be necessary.
What Does Commercial General Liability Insurance Not Cover?
Commercial general liability insurance in Texas doesn’t cover everything? In fact, there are a number of things that it doesn’t cover. This can include things like product liability and injury to employees. So how can you make sure that you’re fully protected? Check out what’s not covered by CGLI.
If you sell a product that ends up injuring someone, CGL insurance will not cover the resulting claim. For this type of exposure, you'll need to purchase product liability insurance.
As the name implies, commercial general liability insurance in Texas only covers accidents and unintentional acts. Any damage or injuries that are caused intentionally by you or your employees will not be covered.
CGL insurance also doesn't cover any injuries sustained by your employees while they're working. For this type of exposure, you'll need to purchase workers' compensation insurance.
What Does Commercial General Liability Insurance Not Cover?
In addition to the types of claims that are specifically excluded from coverage, there may also be other exclusions in your policy. Be sure to read your policy carefully so that you’re aware of any exclusions that apply to your business. While there are exclusions in a CGL policy, which varies by insurers, some of the common exclusions are as follows:
Damage to Your Work
If you or your employees cause damage to your own work, it's typically excluded from coverage. For example, if an employee accidentally damages equipment while setting it up, CGL insurance would not cover the resulting repair costs. Another example is if your business has a garage, which collapsed due to faulty construction and causes damage to a parked vehicle, your CGL policy may cover the repair or replacement of the vehicle, but it will not cover the repair of the collapsed garage.
Damage to Your Product
If your product is damaged while it's in your care, custody, or control, CGL insurance typically won't cover the resulting damages. For example, if you own a bakery and one of your cakes is dropped and damaged, CGL insurance would not cover the cost to repair or replace the cake. This type of damage is typically only covered by product liability insurance.
If you're held liable for damages due to a contract that you've signed, CGL insurance typically won't cover the resulting claim. For example, if you sign a lease agreement that includes a clause stating that you're responsible for any damage to the leased property, your CGL policy would not cover the cost of repairs if the property is damaged while in your care.
Recall of Products, Work, or Impaired Property
If you have to recall your products, work, or property due to a defect, damage, or pollution, CGL insurance will not cover the resulting costs. These types of recalls are typically only covered by product liability insurance.
Workers' Compensation and Employer's Liability
CGL insurance does not cover any injuries sustained by your employees while they're working. For this type of exposure, you'll need to purchase workers' compensation insurance.
How Much Does Commercial General Liability Insurance Cost in Texas?
The cost of commercial general liability insurance in Texas varies depending on a number of factors, including the size and type of business, the amount of coverage, and the deductible. However, you can expect to pay anywhere from $500 to $5,000 per year for CGL insurance.
What is a premium audit?
A premium audit is when an insurance company reviews your business records to make sure that you’re correctly classified and rated. This process typically happens once a year, but it can also happen more frequently if your business has undergone a major change (e.g., you’ve added a new product line).
If the insurance company finds that you’ve been misclassified or under-rated, they may adjust your premium upward. Conversely, if they find that you’ve been overrated, they may refund you the difference.
What is a deductible?
A deductible is the amount of money that you have to pay out-of-pocket before your insurance policy kicks in. For example, if you have a $1,000 deductible and you suffer $2,000 in damages, your insurance company will only pay $1,000 (the difference between the damages and the deductible).
Deductibles can vary depending on the type of claim. For example, some policies have a separate deductible for wind and hail damage, while others have one deductible for all types of claims.
Is commercial general liability insurance required in Texas?
No, commercial general liability insurance is not required in Texas. However, if you have any type of business, it’s a good idea to have CGL insurance in place to protect yourself from potential lawsuits.
Even if you’re a sole proprietor without any employees, you could still be held liable for damages caused by your business. For example, if you’re a consultant and you make a mistake that causes your client to lose money, they could sue you for damages. If you don’t have CGL insurance, you could be on the hook for all of the legal costs, which could quickly bankrupt your business.
Commercial General Liability insurance, also known as CGL, is a type of insurance that businesses can purchase to protect themselves from liability risks. In Texas, Commercial General Liability coverage typically includes protection for risks such as bodily injury, property damage, personal injury, and advertising injury. This coverage can help to protect businesses from the financial consequences of being sued for these types of risks. Commercial General Liability insurance can be purchased as a standalone policy or as part of a business owners policy (BOP). When purchased as part of a BOP, Commercial General Liability insurance typically includes additional coverages such as property insurance and business interruption insurance. Businesses should work with an experienced insurance agent to determine the right type and amount of Commercial General Liability coverage for their specific needs.
Commercial liability insurance and general liability insurance are not the same in Texas. Commercial liability insurance covers a business for claims arising from its business activities. General liability insurance covers a person for claims arising from their personal activities. In Texas, commercial liability insurance is required for businesses with more than five employees. General liability insurance is not required, but it is recommended for individuals who own their own businesses or who are subject to lawsuits. Commercial liability insurance typically covers a wider range of risks than general liability insurance, but it may also be more expensive.
Commercial General Liability Insurance in Texas does not cover things like professional malpractice, automobile accidents, or property damage. It also excludes intentional acts, terrorism, and nuclear reactions. If you need coverage for any of these things, you will need to purchase a separate policy. Commercial General Liability Insurance in Texas is designed to protect businesses from lawsuits arising from third-party injuries or property damage. If you are found liable for an accident, this type of insurance will help to pay for the damages. However, it is important to remember that this type of insurance does not cover everything. Be sure to read your policy carefully so that you know what is and is not covered.
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