What Are the Types of Commercial General Liability (CGL)?

In the modern business landscape, a commercial general liability (CGL) policy is crucial to mitigate the potential risks that businesses face every day. When insurance disputes arise (or preferably long before), understanding the different types of CGL policies is essential. As a leading NY law firm in commercial liability coverage disputes throughout New York and New Jersey, the Law Offices of Richard A. Fogel, P.C., is well-versed in the different types of CGL policies and the complex issues surrounding coverage and claims handling in either type. Read on for an introduction to the different types of CGL policies, and contact the Law Offices of Richard A. Fogel, P.C., for a consultation with an experienced and knowledgeable New York insurance coverage dispute lawyer.

Two Types of CGL Policies

Commercial general liability (CGL) insurance is designed to protect businesses from a wide range of liability exposure. CGL policies break down into two main types: the occurrence policy and the claims-made policy.

Occurrence Policies

An occurrence policy provides coverage for incidents that occur during the policy period, regardless of when the claim is reported. The key element here is the timing of the “occurrence,” not when the claim is made. If the insured event took place while the policy was in force, coverage applies, even if the claim is filed years later.

Let’s take an example: A customer slips on a business premises during the policy term but only files a lawsuit after the policy has expired. Under an occurrence policy, the business would still have coverage, as the incident took place during the policy period.

Claims-Made Policies

A claims-made policy differs in that it provides coverage for claims made during the policy period. The incident could have occurred either during the policy period or at any time if the policy includes a retroactive date. If a claim is made after the policy has expired, there is typically no coverage provided, even if the event underlying the claim occurred during the policy term.

For instance, if a company sells a product that causes harm to a consumer before the policy was in force, but the product liability claim is filed during the policy term, a claims-made policy would provide coverage. If the injurious event happened during the term of the policy but the claim was made after the expiration of the policy term, coverage would not apply.

Occurrence vs. Claims-Made Policies: Which to Choose?

The choice between an occurrence policy and a claims-made policy often depends on a business’s nature and the kind of risk exposure it faces. Generally, occurrence policies may be more desirable due to the extended reporting period. However, claims-made policies might be more cost-effective, as they limit the insurer’s risk to the policy term.

Navigating CGL policies can be complex, but understanding these distinctions can be critical in the management and resolution of coverage disputes. It’s vital to note that not all policies are created equal, and policy language can significantly vary from one insurer to another.

The Law Offices of Richard A. Fogel, P.C. stands ready to guide insurance companies and policyholders through these complex territories, providing legal expertise and a comprehensive understanding of CGL policies.

Contact the Law Offices of Richard A. Fogel, P.C., for Help With Insurance Coverage Litigation in New York

Have questions about coverage litigation surrounding a commercial general liability policy? Get in touch with the Law Offices of Richard A. Fogel, P.C., by calling 516-721-7161 for sound and practical legal advice in insurance matters in New York.