Beware of These Commercial General Liability Exclusions

Commercial general liability (CGL) insurance is an essential form of coverage for all outfitter and guide businesses. This policy can protect your organization if held liable for injuring third parties or damaging their property across negligent acts or during usual business operations. This type of insurance may also cover instances in which your organization is held responsible for causing personal or advertising injuries.

Although CGL insurance applies to a broad range of events, it comes with certain limitations. Specific coverage offerings vary between insurers, but certain portions of a typical CGL policy — known as coverage A and B — include some common exclusions. Understanding these will help your adventure sport business identify potential coverage gaps, minimizing the risk of costly out-of-pocket losses. Let’s dive in.

Finding a commercial general liability policy fit for your business doesn’t have to be hard.  Check out our policy scope here.

Typical Policy Exclusions Under Coverage A

Coverage A refers to the portion of a commercial general liability policy that offers financial protection for expenses stemming from third-party bodily injuries and property damage. For instance, if a customer files a lawsuit after tripping on an uneven floorboard and breaking their leg,  CGL insurance  may help cover the organization’s associated legal fees.

Here are some common exclusions under coverage A:

• Expected or Intended Injuries: If an organization intentionally engages in business activities that could reasonably be expected to cause third-party bodily injuries or property damage, CGL insurance will exclude coverage for any subsequent claims. Put another way, if a business deliberately causes harm to others, its CGL policy won’t cover the related costs.

• Contractual Liability: When an organization takes on the liability of another party in a contractual agreement, it cannot utilize CGL coverage for lawsuits involving bodily injuries or property damage made against that party.

• Liquor Liability: If business makes, sells or serves alcohol as part of its typical business operations, it cannot leverage its CGL policy to cover incidents involving liquor liability. However, liquor liability coverage is available for purchase as a CGL policy endorsement or a standalone offering.

• Employee Injuries: While commercial general liability insurance generally covers third-party bodily injuries, it does not apply to employee injuries. Instead, these injuries are covered under workers’ compensation insurance. Most states require organizations with at least one employee to secure  workers’ compensation coverage.

• Commercial Vehicle Accidents: An organization that utilizes commercial vehicles (leased or owned) during its usual business activities cannot leverage its CGL policy to cover accidents on the road. Liability coverage for such accidents is available for purchase as a standalone  commercial auto policy.

• First-party Property Damage: A business will not receive first-party property protection through its CGL policy. This means that any incidents resulting in damage to the organization’s commercial building, work materials, equipment and inventory are excluded from coverage. This exclusion applies to property owned, rented or occupied by the business, or otherwise in its care, custody or control. In most cases, incidents involving first-party property damage are covered under commercial property insurance.

Common Exclusions Under Coverage B

Coverage B pertains to the portion of a CGL policy that provides financial protection for costs related to personal and advertising injuries, such as libel, slander, copyright infringement, false arrest, malicious prosecution, wrongful eviction and invasion of privacy. For instance, if a business is sued for unintentionally making fraudulent claims about its business competitors in a new advertisement, CGL insurance may help compensate the organization’s related legal expenses.

Here are some common exclusions under coverage B:

• Purposeful Violations: If an organization knowingly engages in acts that violate the rights of another party and, as a result, willingly inflicts personal or advertising injuries, CGL insurance will exclude coverage for any associated claims. To clarify, instances of intentional harm are not insurable under coverage B.

• Inaccurate Price Descriptions: Commercial general liability insurance does not apply to personal or advertising injuries stemming from a business displaying incorrect or misleading price descriptions in advertisements for its products or services.

• Digital Chatrooms & Bulletin Boards: If an organization owns, hosts or otherwise controls digital chatrooms or bulletin boards, it cannot obtain CGL coverage for personal or advertising injuries that arise from these platforms.

• Advertisements Published Before the Policy Period: An organization’s CGL policy will provide precise start and end dates that establish a clear window in which coverage applies. As such, CGL insurance excludes coverage for personal or advertising injuries that occur due to advertisements that an organization publishes prior to the official beginning of its policy period.

Adventure More & Worry Less With CBIZ Adventure Sports Insurance

By gaining a deeper understanding of common CGL policy exclusions, that is, how and when your coverage will (or won’t) apply to a variety of situations, you can better protect your business. As every CGL policy is different, your organization should work with trusted insurance professionals. They will review your specific policy exclusions, discuss your unique coverage needs and address any possible gaps in protection.  Request a free CBIZ Adventure Sport Insurance quote  today.

This blog may contain scenarios that are provided as examples only. In an actual claim situation, coverage is subject to the terms, conditions and exclusions of the policy issued. The information provided is general in nature and may be affected by changes in law or the interpretation of such laws. The reader is advised to contact a professional prior to taking any action based upon this information.

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