General Liability

Commercial General Liability is the “first line” of coverage that a business typically purchases and covers many of the common risks associated with operating a business.

General Liability covers three main categories of claims:

  1. Bodily Injury is a type of personal injury in which a business’s operations cause physical damage or illness to a third party.
  2. Property Damage includes any physical damage to the property of a third party as a result of a business’s operations.
  3. Personal Advertising Injury is a type of personal injury in which a business causes intangible damage to a third party’s reputation, mental state, or emotional wellbeing.

However, if you are looking at a standard Certificate of Insurance (COI), the limits appear differently than one might expect based on the categories of claims described above.

General liability limits - Jones Insurance Guide

Six different limits are explicitly written in the General Liability section of a COI, each serving a different purpose. Toggle the limits below to learn about each limit.

Each Occurrence

This combined single limit describes the maximum amount the insurer is willing to pay for bodily injury or property damage for any single accident, or occurrence.

General liability limits - occurrence - Jones Insurance Guide

General Aggregate

This combined single limit describes the maximum amount the insurer is willing to pay for bodily injury or property damage for all claims that arise over the course of the policy year.

General liability limits - general aggregate - Jones Insurance Guide

Example: Suppose we have an insurance policy with the limits above and we have three accidents over the policy period.

The first accident results in a claim for $1,000,000, the second a claim for $2,000,000, and the third a claim for $3,000,000.

Damage to Rented Premises

This limit is meant to cover two cases that are usually excluded from the coverage provided by the above two limits.

  1. Fire Damage – Fire damage is excluded from General Liability
  2. Short-Term Rentals – When tenants rent a space for under seven days, coverage for accidents that occur due to their occupancy of the space is not cover in standard Property Insurance policies. Instead, it will be covered under Damage to Rented Premises.

General liability limits - damage to rented properties - Jones Insurance Guide

Medical Expenses

General liability limits - medical expenses - Jones Insurance Guide

Personal Advertising Injury

Unlike the other limits of General Liability, the Personal Advertising limit does not cover physical damages to property or person bur rather pertains to abstract, intangible damages such as damage to a brand or reputation, emotional suffering, or harassment afflicted upon a third party.

General liability limits - personal advertising injury - Jones Insurance Guide
This class of nonphysical damage includes the following:

  • False arrest, detention, or imprisonment
  • Malicious prosecution
  • Wrongful eviction or entry
  • Slander or libel of a person or company
  • Violation of a person’s right to privacy
  • Use of another company’s advertising themes or concepts without permission
  • Infringement of a person or firm’s copyright or slogans
Products Completed Operations Hazard

General liability limits - products competed operations hazard - Jones Insurance Guide

A common source of confusion between landlords, property managers, vendors, and tenants is the difference between the type of property damage covered by General Liability and by Property Insurance.

These insurance lines are not interchangeable.

General Liability is third-party insurance. It covers damage the insured causes to the property of others. In particular there are two coverage parts that relate to property damage:

  • The Each Occurence and General Aggregate limits cover most forms of property damage the tenant or vendor may cause to the landlord’s property, excluding fire.
  • The Damage to Rented Premises limit would cover fire damage to the landlord’s property caused by a tenant’s negligence.

Property Insurance, on the other hand, is first-party insurance. It covers damage to the insured’s own property, regardless of whose negligence may have caused the loss.

  • In the case of vendors, this is meant to cover any tools or equipment that will be brought on premises.
  • In the case of tenants, Property Insurance is meant to cover improvements, betterments, fixtures, furnitures, tools, machinery and other personal property kept on premises.