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 ensures 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 to 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(s)). Completing a risk assessment will help determine if the good(s), if faulty or defective, could injure a person or damage property.
When state premises are leased, ensure 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.