Back to Basics: CGL and Commercial Property

22 February 2017

Renewal time is here – and many questions come with it. What is CGL? How does it protect your organization? Do you need commercial property insurance? What is it for?

The renewal process might seem overwhelming and complicated, but we’re here to help. Let’s start by going back to basics:

What is CGL?
Commercial General Liability (CGL) insurance protects you and your organization in the event you are found legally responsible for certain incidents. This includes bodily injuries caused to another person and property damage caused by an accident on your premises or at a client’s location. In a nutshell, CGL provides protection in the event you are sued. It covers legal defence costs and pays the damages on your behalf – up to the limits of your policy – if you are found liable.

Why does your organization need CGL insurance?
Without a Commercial General Liability policy, you are leaving your organization vulnerable to the potentially devastating financial impact of a lawsuit. Your chances of being sued are higher than you might think. A CGL policy is one of the most popular commercial insurance products to help protect your organization from financial loss. 

In some situations, your organization could be responsible for paying various costs, such as medical and legal expenses and compensatory damages. For example: 

  • While visiting your organization, a client trips on loose flooring and severely injures their ankle 
  • While visiting a client, a volunteer accidentally leaves the water running in the bathroom, causing substantial damage to the floors 
  • During an event you organized, a child falls on a puddle in the bathroom and suffers a concussion 

Depending on your business activities, you may need additional liability coverage. Though not usually part of basic commercial liability insurance, the following policies can help you and your organization be better protected: 

Directors and Officers Liability (D&O) If you sit on your organization’s board of directors, your responsibilities are likely similar to those of directors of for-profit companies. However, your organization might not have the resources available to a “for-profit” company when it comes to indemnifying directors or officers, or responding to litigation, settlements and damage awards. This is where Directors and Officers (D&O) Liability insurance comes in. D&O is a type of liability insurance that covers directors and officers, as well as volunteers and employees, for claims made against them while for the organization. It helps protect organizations and their directors or officers against alleged or actual management errors, misstatements and omissions. In other words, it covers your organization should management decisions have adverse financial consequences. This includes losses or advancement of defense costs resulting from legal action. 

Non-owned automobile liability Do your employees or volunteers sometimes use their own car to run an errand for the organization or to take a client to a doctor’s appointment? Do you ever rent a van to take your clients on a shopping trip? If the answer to either of these questions is yes, you need to consider adding non-owned auto coverage to your insurance package. Unlike personal auto insurance, non-owned insurance does not protect the driver, but the organization for which the vehicle is being used. Here is how it works: imagine that one of your employees has an accident in their own vehicle or in a rented vehicle, causing serious injuries to a third party. The employee would be personally liable for the injuries; however, their personal auto policy might not be enough to cover the payable total. As a result, your organization may be liable for the rest of the payable amount because the accident happened while the employee was working. Non-owned auto coverage helps protect your organization by supplementing the driver's personal auto liability coverage. 

What is Commercial Property Insurance? Commercial Property insurance provides your organization with the same kind of protection property insurance provides for your home. As a director or manager, you need to be certain that your organization is properly covered for losses you may experience in the event its physical assets are damaged or destroyed. This includes the building and its contents, owned or leased equipment and outdoor fixtures like fences and signs. Commercial property insurance covers losses from a broad range of causes, such as fire, ice storms or water damage. Besides natural disasters, vehicle collisions and vandalism are other possible threats to your organization’s property. 

The top 3 types of commercial property claims are:

  1. Burglary and theft (average cost per claim: USD 8,000) 
  2. Water and freezing damage (average cost per claim: USD 17,000)
  3. Wind and hail damage (average cost per claim: USD 26,000)

Source: www.propertycasualty360.com 

The amount of coverage you need depends on the type of property and its location. If your organization owns the building in which it operates, your policy needs to cover the structure, any permanent fixtures or extensions and the boilers and HVAC systems. You can insure a broad variety of property, from basic equipment like office furniture and fixtures, computers and electronics, to the personal property of employees or volunteers while at work. You can also cover lighting systems, windows, outdoor signs, fences, landscaping, and more.

Having sufficient commercial property and liability coverage is essential for any organization providing community care services. We’re here to answer your questions and ensure you get the right coverage, at the right price.

Keep your eyes peeled for our next blog, in which we’ll talk about something that has unfortunately become increasingly common: elder abuse. 

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contact Telmo Coelho
Vice President - Healthcare