Commercial General Liability: What Does It Cover?
Inori Team
COI Compliance Experts
If there is one coverage type that every compliance officer must understand deeply, it is Commercial General Liability. CGL appears on every COI requirement set, covers the broadest range of third-party exposures, and is the policy where additional insured status, waiver of subrogation, and primary and non-contributory provisions are most commonly applied.
This guide covers what CGL insures, what it excludes, how its limits are structured, the critical difference between occurrence and claims-made forms, and how additional insured status works under a CGL policy.
What CGL Covers
A Commercial General Liability policy covers four categories of loss, each triggered by different circumstances.
Bodily Injury
Bodily injury means physical harm to a third party — not the insured's own employees (that is Workers' Compensation), but visitors, customers, tenants, bystanders, or anyone else affected by the insured's operations.
Examples:
- A visitor to a construction site trips over an unsecured power cord and fractures a wrist.
- A tenant's client slips on a freshly mopped floor in a building common area.
- A pedestrian is struck by debris falling from a scaffolding operation.
CGL covers the injured party's medical expenses, lost wages, pain and suffering, and the insured's legal defense costs — regardless of whether the insured is ultimately found liable. Defense costs are typically paid in addition to the policy limits, meaning a $1M limit is $1M for damages, with defense costs on top.
Property Damage
Property damage means physical damage to or destruction of tangible property belonging to a third party, including loss of use of that property.
Examples:
- A plumber's torch ignites insulation in a wall cavity, causing fire damage to an adjacent tenant space.
- An excavation contractor's equipment ruptures an underground utility line, flooding a basement.
- A vendor's forklift backs into a building column, causing structural damage.
The "loss of use" component is important. If a vendor's negligence renders a tenant space unusable for three months, the loss of rental income to the property owner is a property damage claim under the vendor's CGL.
Personal Injury
Personal injury in the CGL context does not refer to bodily injury (a common confusion). It refers to non-physical torts:
- False arrest, detention, or imprisonment
- Malicious prosecution
- Wrongful eviction (particularly relevant in real estate)
- Libel and slander (oral or written publication that damages reputation)
- Violation of right to privacy
Personal injury claims are less common in construction and property management but do arise — particularly wrongful eviction claims against property managers and security firms.
Advertising Injury
Advertising injury covers claims arising from the insured's advertising activities:
- Copyright infringement in advertisements
- Misappropriation of advertising ideas
- Infringement of another's trademark or trade dress
This coverage is most relevant for vendors providing marketing, signage, or branding services.
What CGL Does Not Cover
Understanding CGL exclusions is just as important as understanding what it covers. The major exclusions define the boundaries of the policy and explain why other coverage types exist.
Automobile Liability
Any bodily injury or property damage arising from the ownership, maintenance, or use of an automobile is excluded. This is why Commercial Auto Liability is a separate required coverage. If a vendor's employee causes an accident while driving to your property, the CGL policy does not respond — only the auto policy does.
Workers' Compensation
Bodily injury to the insured's own employees is excluded. Employee injuries are covered by Workers' Compensation. If a vendor's employee is injured on the job, the vendor's WC policy pays — not the CGL.
Professional Services
CGL excludes claims arising from the rendering of or failure to render professional services. An architect whose design error causes a building to settle, an engineer whose structural calculations are wrong, a consultant whose advice leads to a financial loss — none of these are covered by CGL. Professional Liability (E&O) insurance fills this gap.
Pollution
The standard CGL policy contains a total pollution exclusion that eliminates coverage for bodily injury or property damage arising from the discharge, dispersal, seepage, migration, release, or escape of pollutants. This exclusion is extremely broad and has been interpreted by courts to include everything from chemical spills to carbon monoxide from a malfunctioning furnace. Pollution Liability insurance is necessary for any vendor whose operations involve hazardous substances.
Intentional Acts
CGL does not cover intentional damage or injury. The policy requires that the bodily injury or property damage be caused by an "occurrence," which the standard policy defines as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." If a vendor deliberately damages your property, their CGL policy will not pay.
Damage to the Insured's Own Work
CGL excludes damage to the insured's own work or product. If a contractor's installation is defective and must be torn out and redone, the cost of replacing the contractor's own work is not covered. However, if the defective work causes damage to other property (a leaking pipe installation that damages the floor below), the resulting damage to the other property is covered.
Care, Custody, or Control
Property in the insured's care, custody, or control is generally excluded under CGL, with the exception of Damage to Rented Premises. If a vendor is given equipment to use and damages it, the CGL policy likely will not cover the loss. This exclusion is why specialized coverages like Inland Marine and Installation Floater exist.
CGL Limit Structure
CGL policies have a layered limit structure. Each limit serves a different purpose, and all of them appear on the ACORD 25 certificate.
Each Occurrence
The maximum the insurer pays for a single occurrence — one accident, one incident, one event. Standard: $1,000,000. This is the most important limit on the certificate because it determines the maximum available coverage for any single claim.
General Aggregate
The maximum the insurer pays for all claims during the policy period, excluding products/completed operations claims. Standard: $2,000,000. Once exhausted, the insured has no further CGL coverage for the remainder of the term.
Products-Completed Operations Aggregate
A separate aggregate for claims arising from the insured's products or completed work. Standard: $2,000,000. This limit is independent of the general aggregate — claims against completed operations do not erode the general aggregate, and vice versa.
Damage to Rented Premises
The maximum paid for property damage to any one premises rented to the insured. Standard: $100,000. For CRE tenants and vendors occupying space, this limit is often increased to $300,000–$1,000,000 by endorsement.
Medical Expense
Covers immediate medical costs for third parties injured on or because of the insured's premises or operations, regardless of fault. Standard: $5,000 per person. This is a goodwill coverage designed to resolve small claims without litigation.
Personal and Advertising Injury
The maximum paid for personal injury and advertising injury claims. Standard: $1,000,000, typically equal to the each occurrence limit.
Occurrence vs. Claims-Made
The trigger mechanism determines when coverage applies, and it is one of the most important details on a CGL certificate.
Occurrence Form
An occurrence-based policy covers incidents that happen during the policy period, regardless of when the claim is filed. This is the standard form for CGL and the one that most requirement sets mandate.
The advantage is long-tail protection. If a vendor had an occurrence policy in effect from January 2025 to January 2026, and an injury that happened in June 2025 is not reported until March 2027, the 2025-2026 policy responds. There is no deadline for filing the claim (subject to the statute of limitations).
Claims-Made Form
A claims-made policy covers claims that are made during the policy period. The incident must also have occurred after the policy's retroactive date. If the policy expires or is not renewed, claims made after the termination date are not covered — even if the incident happened while the policy was in force.
Claims-made CGL policies exist but are uncommon. When you encounter one, verify:
- Retroactive date: Must precede the start of the vendor's work on your property.
- Extended reporting period (tail): If the vendor's policy is cancelled or not renewed, an ERP provides additional time (typically 1-3 years) to report claims for incidents that occurred during the policy period.
Most compliance programs require occurrence-form CGL. If you accept claims-made, build in safeguards: require a retroactive date that covers the full period of work and require tail coverage after the engagement ends.
Aggregate Basis: Per Project vs. General
This detail is easy to overlook but can have significant financial consequences.
When the aggregate applies on a general (per policy) basis, all claims from all operations across all locations share one aggregate limit. A vendor working on five of your properties has one $2M aggregate covering all five. A large claim on one property could exhaust the aggregate, leaving no coverage for the other four.
When the aggregate applies on a per project basis (endorsed with CG 25 03 or CG 25 04), each project gets its own aggregate limit. The same vendor now has a $2M aggregate for each of your five properties — a far more robust coverage position.
For construction projects and multi-property vendor relationships, require the per project aggregate endorsement. On the ACORD 25, this is indicated by checking "Per: Project" in the CGL section. If it says "Per: Policy" or is blank, the general aggregate applies across all operations.
Additional Insured Under CGL
Requiring additional insured status on a vendor's CGL policy is the single most important risk transfer mechanism in COI compliance. When your organization is an additional insured, the vendor's CGL responds to claims arising from the vendor's work before your own insurance is implicated.
How It Works
When you are named as an additional insured on a vendor's CGL, and a claim arises from the vendor's operations, the vendor's CGL policy provides you with defense and indemnity coverage as if you were a named insured on their policy — but only for liability arising out of the vendor's work. Your own CGL policy is not triggered (assuming the vendor's policy is primary and non-contributory).
Key Endorsement Forms
- CG 20 10: Additional Insured — Owners, Lessees, or Contractors — Scheduled Person or Organization. Covers ongoing operations only.
- CG 20 37: Additional Insured — Owners, Lessees, or Contractors — Completed Operations. Covers claims after work is finished.
Require both. CG 20 10 alone leaves you unprotected once the vendor's work is complete. Many of the most expensive claims in construction and property management arise from completed operations — water intrusion, structural defects, fire protection system failures — that manifest months or years after the work is done.
Primary and Non-Contributory
The additional insured endorsement is most effective when paired with a Primary and Non-Contributory provision. This means the vendor's CGL pays first (primary) and does not seek contribution from your own CGL policy (non-contributory). Without this language, the vendor's insurer might argue that your policy should share in the loss — defeating the purpose of the additional insured requirement.
On the ACORD 25, Primary and Non-Contributory is typically noted in the Description of Operations section.
Verification on the Certificate
Additional insured status should be confirmed in at least one of these locations on the ACORD 25:
- The Additional Insured checkbox in the CGL row is checked.
- The Description of Operations section includes language identifying the additional insured and the applicable endorsement forms.
- Your organization's full legal name appears as part of the additional insured notation.
If the certificate only lists you as the Certificate Holder but does not indicate additional insured status, you are not an additional insured. Certificate holder status alone provides no coverage rights.
CGL in Practice
Commercial General Liability is the policy that keeps commercial relationships functioning. It is the reason a property owner can hire a contractor without personally guaranteeing every risk the contractor creates. It is the mechanism that keeps a single negligent act by a vendor from becoming a catastrophic financial event for the property owner.
Understanding CGL — its coverages, its exclusions, its limits, and its endorsements — is the foundation of effective COI compliance. Every other coverage type builds on or around the CGL, filling gaps that the CGL was never designed to cover.
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