You’re a responsible small business owner. You care about making your clients happy, and you take pride in meeting your deadlines and delivering your services. It's important to you that your business is entirely legal, with all the licenses and insurance it needs.
You also enjoy the peace of mind that comes from knowing that your business is protected from the consequences of accidents, mistakes, or unhappy clients. That’s why you make sure that you have all the small business insurance that you need - including CGL insurance.
What is CGL Insurance?
CGL insurance stands for Commercial General Liability Insurance. It’s a popular business insurance policy for small business owners and independent contractors. CGL insurance generally includes 3 types of insurance, bundled together into one package. CGL insurance can be thought of as the basic insurance that small businesses need.
What does CGL cover?
CGL coverage includes three different types of insurance claims:
- Bodily injury. This refers to physical injuries and accidents that take place on your premises, or directly because of your work.
- Property damage. This covers damage done to someone’s property by you or one of your employees during your work, or that occurs on your premises.
- Personal injury. This means non-physical damage that you caused through your work.
It’s easier to explain what is CGL insurance with some real-life examples:
CGL coverage for bodily injury includes:
- You’re DJing at a wedding when a guest falls over your speakers and breaks their wrist. They sue you for the trip to the emergency room.
- You’re walking your clients’ dogs when someone rollerblades in the opposite direction. They trip over the leash and fall, breaking their nose on the sidewalk. They insist that you pay for medical costs.
- A product representative comes to your office to show you some new items for your eCommerce store. On the way in, they slip on the shiny floor and twist their ankle. You have to pay for their X-rays and treatment.
- While you’re doing repairs at a client’s house, you accidentally knock a box of nails off the top of the ladder. Your client’s child runs barefoot across the floor before you have time to clean them up, and gets one stuck in their foot. They have to stay overnight in hospital to have the nail removed and get a tetanus injection, and you have to pay the costs.
CGL insurance for property damage
- While you’re rewiring a client’s house, you accidentally hit a nail through the main water pipe, causing a huge flood. The client sues you for the damage to their property.
- You visit a client’s home as part of your consultancy business. When you sit down, you knock your full coffee cup all over their top-of-the-line laptop. They insist that you pay for the cost of a new laptop and retrieving all their files.
- You go into a client’s home for a private yoga lesson. On your way in, your yoga mat knocks over an expensive vase, which smashes into tiny pieces. Your client wants you to pay for the cost of the vase.
- You park your janitor van at the office building where you clean every night. You accidentally scrape paint off one side chief executive’s expensive car when you park. The CEO makes you pay to repaint the whole side in the exact same shade of red.
CGL insurance for personal injury
- You use a photo of the beautiful new garden that you just built as part of your landscaping business advertising. The client didn’t give you permission to use a photo of their home, and sues you for breaking their privacy
- Your golf instructor marketing campaign promises to help even the worst golfer to improve their game. You include a photo of one of your long-time clients. Your client agreed to let you use their photo, but is upset that your marketing claims that they are a terrible golfer. They sue you for affecting their golfing reputation.
- You put a photo of Angelina Jolie on your hairdressing business Instagram page, as an example of the type of haircut you offer. Angelina’s publicist sues you for using her picture without copyright.
- Your plumbing business flyers claim that your prices are better than all your competitors. One of your competitors is upset that you accused them of charging too much, and sues you for defamation.
What is not included in CGL coverage?
Although there are a lot of benefits to independent contractor coverage under CGL, it doesn’t cover every possibility. Here are some of the incidents that are not included in your CGL coverage:
- Workers’ compensation: Your construction assistant slips a disc while carrying a heavy load of bricks. They can’t work for the next 8 weeks while their back heals. CGL insurance doesn’t pay for workers’ compensation or disability insurance.
- Professional liability insurance: Your client doesn’t like the color of the tiles that you advised them to put into their new bathroom, and sues you for the cost of the work you did.
- Equipment or property insurance: Your expensive pressure washer is stolen out of your van overnight. You have no choice but to pay for the replacement yourself.
- Product liability insurance: You sell a Pilates Magic Circle to a client, but it breaks unexpectedly, causing the client to break their wrist.
How Much does CGL Insurance Cost?
How much your CGL insurance will cost depends on a few different factors. Here are some of the things that affect how much your CGL insurance costs:
- What is your profession? Some types of businesses are at more risk of getting sued than others. For example, you’re more likely to cause accidental property damage as a handyman than as an accountant.
- How big is your business? The more employees you have, the greater the risk of something going wrong, sometime.
- How much is your deductible? You can choose the size of your deductible. The larger the deductible, the lower your CGL insurance costs.
- What is your coverage limit? If you need $1 million in CGL coverage, you’ll have to pay more than if you only need $100,000 of coverage.
When you think about how much CGL costs, remember how much it saves you. If you don’t have CGL insurance, you could end up having to pay far, far more in costs, out of your own pocket.
What are the Benefits of CGL Insurance?
The benefits of CGL liability insurance for contractors go beyond the actual cost of the insurance payout. Knowing that you have valid contractors’ insurance gives you the confidence to apply for the big jobs. With CGL coverage, you’ll push yourself to learn new skills, knowing that your CGL insurance has your back.
What’s more, with CGL insurance you’ll be able to get more clients. Having a valid Certificate of Insurance shows your clients that you are trustworthy. It’s proof that they can rely on you to take responsibility for your actions and fix your mistakes.
CGL insurance also gives you the peace of mind to focus on growing your business. You’ll reach out to new clients and new opportunities without worrying about what might happen.
Finally, CGL insurance means that you have the flexibility to take on a new client or project at any time. Your insurance is ready when you are.