Thursday, April 2, 2015

Commercial General Liability(CGL) vs Garage Liability

Commercial General Liability(CGL) vs Garage Liability

Which one do you need and what is the difference.

Below are a few excerpts or different articles discussing the 2 so you can make a good decision.

Some may wonder, though, if these liability exposures can be insured against simply by using a commercial general liability coverage form instead of a Garage Liability policy.

Both pay the sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage.

However, there are significant differences between the two coverage forms that an insured should be aware of before he or she purchases insurance.
The Basics:

Commercial General Liability
Most businesses need insurance coverage that will protect them in case they are found liable, or accused in court of being liable, for injury or financial harm to someone. A customer could trip and fall on the premises, or a defective product could hurt someone or burn down a house, or a competitor might sue over allegedly false advertising. Your business can purchase policies to cover the instances where its exposure is greatest, or you can get a commercial general liability, or CGL, policy which serves as a sort of blanket coverage for all instances of possible liability--except where specifically excluded.

Auto Coverage
CGL policies, however, do not cover liability associated with vehicles owned or operated by a business. If a customer breaks his leg in your store, CGL will cover it. But if your delivery van runs over someone in the street and breaks his leg, CGL won't cover it. To obtain liability coverage for your company's vehicles, you need a business auto policy. But these policies are geared toward companies for whom automobile use is incidental. They can have limits and exclusions that make them untenable for businesses, such as car dealerships, which have enormous fleets of autos that are regularly driven by non-employees.

Car dealerships, repair shops, service stations and other companies that work with automobiles have special insurance needs that aren't adequately addressed by the general liability policies available to most commercial customers. 


Liability Exposures
A CGL form can be used to cover the liability exposures of manufacturing or processing businesses as well as service and contracting businesses, mercantile operations, office buildings, and apartments. A garage policy is more limited in scope, applying to auto repair shops, service stations and auto dealerships. It is true that a garage business may sell items like a retail store, but the main focus for the garage is garage operations--not manufacturing, mercantile or office liability risks.

The exclusions sections of the two forms also offer some differences.

The garage form specifically excludes coverage for bodily injury to any person arising out of any employment-related practices, such as coercion, defamation, harassment and discrimination. The CGL form is silent on this point.

The "who is an insured" clauses on the two policies are another area of difference.

 The garage form makes the point that it offers coverage for the ownership and use of autos by discussing who is an insured for covered autos. The CGL form does not.

On the other hand, the CGL form permits insured status for trustees, volunteers and spouses of partners, while the garage policy does not mention these individuals.

The definitions on the CGL form and the garage policy represent another area that points out the different natures of the two insurance policies.

The garage form defines an auto as "a land motor vehicle, trailer or semitrailer. The CGL form has the same definition, but adds the sentence that an auto "does not include mobile equipment." This addition, plus the defining of mobile equipment on the CGL form, shows that liability from the ownership and use of mobile equipment is meant to be covered under the CGL form and not the garage form.

So, if a garage business has a forklift, a riding lawn mower or a removable snowplow, and a liability claim arises due to the use of these items, the insured may have a problem upon presenting the claim to the garage insurer.

The definition of product also shows the different coverage designs of the garage policy and the CGL form.

On the garage policy, products include goods or products made or sold by the named insured in a garage business. The CGL form defines a product as any goods or products manufactured, sold, handled, distributed or disposed of by the named insured.

Covered Auto Symbols:


Michael Fillers, CPIA
Morris Insurance Agency, LLC
3032 Dauphin Square Connector
Mobile, AL 36607
O - 251-473-5119
F - 251-473-6301
C - 251-753-8011
How I met JESUS in the flesh and HE saved me:
Matt 24:46-47
"Blessed is he whom his master will find at work when he arrives. Truly I tell you, he will put that one in charge of all his possessions."



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