Commercial General Liability (CGL) Insurance

A typical Commercial General Liability (CGL) insurance policy covers claims made by third parties for damages the insured party is legally obligated to pay as the result of an “occurrence” resulting in bodily injury or property damage taking place during the policy period. Generally, CGL insurance policies only cover bodily injury or property damage that occurs during the policy term (or any extended reporting period an insured may be able to purchase on the policy), regardless of when the claim is made. These are termed occurrence-based insurance policies. Occurrence-based policies typically define the term occurrence as an accident, which is neither expected nor intended from the standpoint of the insured. Claims-made insurance policies, on the other hand, only cover claims made during the term of the insurance policy. Thus, for there to be any potential for coverage under a claims-made policy, the insured must have made a claim during the policy period (or any extended reporting period an insured may be able to purchase on the policy). As a result, an important question to ask at the end of a claims-made policy term becomes whether an insured has renewed the policy’s protection against environmental risk thus enabling the insured to make a claim for coverage within the (new) extended policy term.