Commercial general liability
Contractor shall obtain, at Contractor’s expense, and keep in effect
during the term of this Contract, Commercial General Liability Insurance
covering bodily injury and property damage in a form and with coverages that
are satisfactory to the State. This insurance shall include personal and
advertising injury liability, products and completed operations and contractual
liability coverage for the indemnity provided under this contract. Coverage shall be written on an occurrence
basis in an amount not be less than $ _______ per occurrence. Annual aggregate
limit shall not be less than $ _______.
When do they apply?
- Commercial General Liability (CGL) is required in most contracts. This coverage is perhaps the most important
of all insurance policies in a contractual relationship. It insures that the
Contractor has broad liability coverage for contractual activities and for
- Use in most services contracts, trade or professional contracts, and
most public contracts. Depending on the outcome of a risk assessment, consider requiring whenever Contractor will be doing work on state’s
property. Use when state could be partially blamed for property damage or
bodily injury caused by Contractor. Use to provide financial support to keep
Contractor in business even if sued.
- Mobile equipment is often used in construction and resurfacing projects.
This equipment is designed for use off public roads and is not subject to motor
vehicle registration. When Contractors use mobile equipment require CGL
coverage for the liability exposure arising from the Contractor´s operation of
the mobile equipment. Also require automobile liability whenever the Contractor
transports mobile equipment to the work site. (CGL insurance does not cover the
transport of mobile equipment.) Insure automobile liability includes coverage
for owned, non-owned or hired vehicles.
- Commercial General Liability (CGL) should be required in most
contracts. This coverage is perhaps the
most important of all insurance policies in a contractual relationship. It
insures that the Contractor has broad liability coverage for contractual
activities and for completed operations.
- Defends and pays Contractor’s liability for unintentional personal and
advertising or bodily injury and property damage (including loss of use) to
others. Usually excludes liability for pollution, and sex abuse. Recommend
policy specifically include products & completed operations coverage.
- Keep in mind that the contractual liability coverage is most likely
limited to “liability for acts the insured would have in the absence of a
contract." Do not depend on this type of insurance to cover “the
indemnity assumed under the contract." If the risk of something
going wrong is high or extreme, relating to contractual liability, it is
important for your agency to consider other non-insurance risk control methods to
handle these risks.
- Coverage is generally written on an occurrence basis. However, on
occasion, coverage may be written as "claims made". Require
"Tail" Coverage for all "claims made" coverage. If excess
or umbrella coverage is used to supplement the primary CGL policy, the excess
coverage amounts must begin where the primary CGL limits end. Alternative
insurance called “wrap up "may apply on very large construction projects
($90 million in construction costs).
- Goods with No Services: CGL
coverage may still be required, particularly with regard coverage for Products
and Completed Operations under the CGL policy (which covers bodily injury and
property claims for damages resulting from negligence associated with
businesses that manufacture something or sell a tangible product or good). Completing a risk assessment will help determine if the good, if faulty or defective, could injure a
person or damage property.
- When state premises are leased, insure that the lessee or tenant´s CGL
coverage provides adequate limits for property damage to cover the state´s
exposure to loss. This coverage is called "Damage to Premises Rented to
You" (old terminology - Fire Damage Legal Liability). Note: In the case of
damage by fire, coverage applies when either the premises are rented or
temporarily occupied with permission of the owner (state). Require property
coverage when the limits under this CGL coverage are inadequate for the value
of the structure.
- Most Commercial General Liability policies exclude liability arising out
of watercraft, so special coverage is needed. See Marine Insurance.
- Bodily injury - Bodily injury, sickness or disease sustained by a
person, including death resulting from any of these at any time.
- Contractual liability - A portion of Commercial General Liability (CGL)
coverage that allows limited coverage for liability assumed under the contract.
The coverage allowed by Contractual Liability includes:
- Liability that the insured would have in the absence of the contract or agreement.
- Liability assumed under an "insured contract."
- Per CGL policy definitions, an "insured contract" means:
- General aggregate limit under the standard CGL policy means: the maximum
limit of insurance payable during any given annual policy period for all
covered losses other than those arising from the products and completed
- Personal and advertising injury means: Injury, including consequential
"bodily injury," arising out of one or more of the following offenses:
- False arrest, detention or imprisonment.
- Wrongfulentryy into, or eviction of a person from, a room, dwelling, or premises that the person occupies.
- Oral or written publication of materials that slanders
or libels a person or organization or belittles a person´s or
organization´s goods, products, or services.
- Oral or written publication of material that violates a person's right of privacy.
- Products and completed operations coverage - Covers losses arising out
of a manufacturer, merchant, or distributor's liability, due to injury or
damage to a third party resulting from the use of a covered product. Covers the
contractor for damage or injury to third parties resulting from something the
contractor made, sold, repaired, or installed. The loss or damage resulting
from the service would be covered, not the contractor's actual product.
- Use the risk assessment to assess the risks of the particular contract to determine appropriate
insurance limits and risk control measures. Ask questions such as, but not
limited to: How could the Contractor´s activities cause property damage or
injury to others? What is the chance that serious damage or injury will occur?
Will the Contractor have access to employees, clients, and/or confidential
information? Where will the Contractor perform the contractual work at home, on
state premises, or at other locations?