Commercial general liability insurance covers your business against third-party claims for bodily injury, property damage, and personal or advertising injury. Nearly every standard CGL policy sold in the United States is written on the same ISO form (CG 00 01), which splits coverage into three parts, sets separate limits for different kinds of loss, and lists a long set of exclusions that carve out situations most business owners assume are protected. Understanding what’s inside the policy and what’s been pulled out is the difference between having real protection and finding out mid-claim that you don’t.
The Three Coverage Parts
A standard CGL policy is built from three coverage sections. Each one answers a different kind of claim.
Coverage A: Bodily Injury and Property Damage
Coverage A is the core of the policy. It pays damages when your business is legally responsible for physically injuring someone or damaging their property, as long as the injury or damage results from an “occurrence” — defined in the policy as an accident, including continuous or repeated exposure to conditions. A customer slipping on a wet floor, a delivery that damages a client’s loading dock, a product that malfunctions and hurts the person using it: all Coverage A territory.1Insurance Information Institute. Commercial General Liability Insurance
Coverage A also triggers the insurer’s duty to defend. When someone sues your business for a covered bodily injury or property damage claim, the insurer must hire and pay for your legal defense, even if the lawsuit is groundless. Defense costs are paid on top of your policy limits, so attorney fees do not reduce the money available to settle or satisfy a judgment.
Coverage B: Personal and Advertising Injury
Coverage B handles a different category of harm: non-physical injuries caused by specific listed offenses. Those offenses include defamation (libel and slander), false arrest or detention, malicious prosecution, wrongful eviction, invasion of privacy, and copyright infringement in your advertising.1Insurance Information Institute. Commercial General Liability Insurance If a competitor sues because your ad campaign copies their slogan, or a former tenant claims wrongful eviction, Coverage B responds. Marketing, publishing, and media businesses have the most exposure here, but any company that advertises can trigger a claim.
Coverage C: Medical Payments
Coverage C is a smaller, faster-moving provision. It pays medical expenses for non-employees injured on your premises or by your operations, regardless of whether your business was at fault.1Insurance Information Institute. Commercial General Liability Insurance A visitor trips over a curb in your parking lot and needs an ambulance ride; Coverage C handles the bill without anyone having to file a lawsuit. Limits are low, usually $5,000 or $10,000 per person, but the practical point is goodwill. Paying an emergency room bill quickly often prevents a much bigger liability claim later.
How the Limits Stack
CGL limits are layered, and the layers matter. Most small businesses buy $1 million per occurrence and $2 million aggregate, but those two numbers don’t tell the whole story. Three limits interact.
The per-occurrence limit caps what the insurer pays for any single accident or event, across both Coverage A damages and Coverage C medical payments. A $1 million per-occurrence limit is the ceiling for one incident, no matter how many people are hurt or how many properties are damaged.
The general aggregate limit caps the insurer’s total payouts for all claims during the policy period, except those arising from your products or completed work. It absorbs Coverage A claims from your premises and ongoing operations, all Coverage B personal and advertising injury claims, and all Coverage C medical payments. Once you exhaust the aggregate, the insurer owes nothing more for the rest of the policy period for those claim types. With a $2 million aggregate, two $1 million claims wipe out coverage for the year.
The products-completed operations aggregate is a separate bucket that applies only to bodily injury or property damage arising from your products or your completed work. Payments from that bucket don’t reduce your general aggregate, and vice versa. For contractors and manufacturers, this separation matters. A string of premises liability claims won’t eat into the coverage that protects you against claims from finished projects.
Products and Completed Operations
If your business manufactures, sells, or installs anything, products-completed operations coverage is one of the most valuable pieces of the policy. It covers bodily injury or property damage arising from your product or completed work after you’ve handed it off. The exposure begins once the product leaves your possession or the job is done and turned over to the customer.
Work counts as “completed” when all the tasks required under the contract are finished, when all work at a job site is done, or when the customer starts using the completed portion. Minor service or maintenance still to come doesn’t matter; the work is considered finished for coverage purposes. A roofing contractor who finishes a job in June is still covered under products-completed operations if a leak from faulty installation causes water damage the following January.
Because the products-completed operations aggregate is separate from the general aggregate, claims against finished work don’t drain the coverage available for your ongoing operations. For contractors, that separation can be what stands between having coverage when a completed-work claim hits and having nothing left.
What CGL Does Not Cover
The exclusions do as much to define the policy as the coverage parts do. The standard form contains more than a dozen, and several of them regularly surprise business owners who assumed they were protected.
Intentional Acts
CGL covers accidents, not deliberate harm. If an employee assaults a customer, or a business owner deliberately destroys a competitor’s property, the insurer won’t pay. The policy exists for mistakes and bad luck, not misconduct.
Pollution
The pollution exclusion is broad and heavily litigated. It eliminates coverage for bodily injury or property damage arising from the discharge, release, or escape of pollutants at premises you own, occupy, or rent, at waste handling sites, and at locations where you’re performing operations. Narrow exceptions exist — for injuries from equipment that heats or cools a building, for example, or damage from a hostile fire — but for most environmental contamination events, the standard CGL won’t respond. Businesses with environmental exposure need a separate pollution liability policy.
Autos, Aircraft, and Watercraft
Injuries or property damage arising from vehicles your business owns, operates, or rents are excluded. The exclusion is there to coordinate the CGL with your commercial auto policy: general liability sits with the CGL, vehicle liability sits with the auto policy. If one of your drivers causes an accident during a delivery, the CGL won’t pay. Any business that uses vehicles needs a standalone commercial auto policy.
Injuries to Your Own Employees
Injuries to your employees are carved out entirely. If a worker gets hurt on the job, that’s a workers’ compensation claim, not a CGL claim. The exclusion applies even to “statutory employees” — workers who might not be on your payroll directly but are treated as employees under state workers’ compensation laws. The CGL covers liability to the public, not to your own workforce.
Your Own Product and Your Own Work
The CGL won’t pay to repair or replace your own product or your own completed work. If you manufacture a machine and a defect destroys the machine itself, that’s a warranty or product recall problem, not a CGL claim. If a contractor’s finished work fails and has to be torn out and redone, the cost of replacing that work isn’t covered. There’s one important carve-back: if the damage to your completed project was caused by a subcontractor’s portion of the work, the exclusion doesn’t apply. That exception is the reason general contractors pay such close attention to what their subcontractors carry.
Property in Your Care, Custody, or Control
If someone else’s personal property is in your possession and you damage it, Coverage A typically won’t respond. A dry cleaner that ruins a customer’s suit, a mechanic who damages a car in the shop, a warehouse that lets stored inventory get water-damaged: all outside Coverage A because the property was in the insured’s care, custody, or control. Businesses that routinely handle customer property often need an inland marine or bailee’s coverage endorsement to close that gap.
Contractual Liability, With a Major Carve-Back
The CGL excludes liability you assume through a contract. If you sign an agreement promising to cover someone else’s losses, the insurer generally won’t honor that promise on your behalf. The carve-back is significant: the exclusion doesn’t apply to “insured contracts,” which include leases, sidetrack agreements, easement and license agreements, elevator maintenance agreements, and any contract where you assume someone else’s tort liability in connection with your business. That last category covers most standard indemnification clauses in construction and service contracts. The exception itself has limits: it doesn’t apply to agreements indemnifying architects, engineers, or surveyors for their professional services, and it doesn’t apply to railroad operations within 50 feet of railroad property.
Professional Services
This one is widely misunderstood. The standard CGL form does not automatically exclude professional services; insurers have to add a specific endorsement to strip that coverage out. But the CGL only covers claims arising from bodily injury, property damage, or the specific personal and advertising injury offenses listed in Coverage B. Pure financial losses from professional mistakes — bad advice from a consultant, an accounting error, a design flaw from an architect — don’t fit into any of those buckets. Professionals who give advice, design things, or provide specialized services still need errors and omissions or professional liability insurance to fill the gap.
Where CGL Leaves Gaps You Need to Fill Elsewhere
Because the exclusions are broad, most businesses carry other coverage alongside their CGL. Pollution liability, commercial auto, workers’ compensation, and professional liability each pick up one of the major carve-outs above. Businesses that handle customer property add inland marine or bailee’s coverage.
Coverage limits also run out. A $1 million per-occurrence limit sounds like a lot until you face a serious injury claim with six-figure medical bills and a plaintiff’s attorney calculating lifetime lost earnings. Two options extend the policy when the CGL limits aren’t enough.
An umbrella liability policy sits on top of your CGL, commercial auto, and employer’s liability policies simultaneously, providing additional coverage (typically in $1 million increments) once any of those underlying limits are exhausted. Some umbrella policies also respond to claims that fall outside your underlying policies entirely, broadening your protection.
An excess liability policy works similarly but only applies to one underlying policy at a time. It’s a straight extension of limits without the broader coverage an umbrella can provide.
Businesses in higher-risk industries such as construction, manufacturing, and hospitality frequently carry umbrella limits of $5 million or more. Many commercial contracts and lease agreements require proof of umbrella coverage before you can bid on a project or sign a lease.
Additional Insured Endorsements
In practice, you’ll run into additional insured requirements constantly. Property owners require them from tenants, general contractors require them from subcontractors, and project owners require them from everyone. An additional insured endorsement extends your CGL coverage to a third party, giving them defense and indemnity rights under your policy for liability arising from your work.
Two endorsement forms come up most often. The CG 20 10 covers additional insureds for liability from your ongoing operations, meaning your work while it’s in progress. Once the project is finished, that endorsement stops responding. The CG 20 37 picks up from there, covering the additional insured for liability arising from your completed work. Most contracts require both forms together so protection stays continuous from the start of the job through the completed-operations tail.
Additional insured coverage has limits of its own. The additional insured is not covered for their own sole negligence; your business has to be at least partly responsible for the loss. And the coverage won’t exceed either the amount required in the contract or your policy limits, whichever is less.
Put the three coverage parts, the layered limits, and the exclusions together, and CGL is a targeted product: broad protection against third-party accidents caused by your operations, and near-total silence on employees, vehicles, pollution, your own work, property in your hands, and professional judgment. Reading your policy against that list is the fastest way to see where you’re actually protected and where you still need to buy something else.