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8 minute read Published on Aug 18, 2026 by BrokerLink Communications
Commercial general liability insurance, or CGL, covers situations where someone claims that your business caused bodily injury to someone else or damage to their property. “Someone else” means people outside your business, like customers, clients or members of the public. It doesn’t cover you or your employees. For example, a customer could slip on a wet floor and get hurt. Or a contractor could damage a client’s property while doing a job. In both cases, the claim is about injury or damage connected to the business’s day-to-day activities.
When people talk about “commercial liability insurance,” this is usually the policy they mean. It’s also the one landlords, lenders and even clients most often ask for. But even when it isn’t required, it’s often the starting point for a business insurance plan. The exact wording for CGL tends to vary from insurer to insurer. Still, most CGL policies in Canada are built on similar foundations, with differences in limits, exclusions and add-ons rather than structure.
Commercial general liability (CGL) insurance is meant to deal with a narrow set of risks, so it doesn’t cover everything that can go wrong in a business. But what it does cover is fairly specific. Let's take a closer look:
If someone who doesn’t work for you gets injured because of your business, CGL is usually the policy that responds. If a liability claim is made, the policy can cover their medical expenses, your legal fees and any settlement or court award, up to the policy limit. That could include:
A customer slipping on an icy sidewalk outside your storefront
A visitor tripping over tools at a job site
Someone getting hurt by falling materials
A product that you sold later fails and causes property damage or injury
Example: A customer slips on ice outside your entrance and fractures an ankle. Your CGL responds with medical payments and later your defence costs and a settlement.
If your business damages property that you do not own, your CGL insurance may apply. It can cover repair or replacement costs, along with legal costs if the owner makes a claim.
Examples include:
Hitting a water pipe while drilling into a wall
Ruining flooring with cleaning chemicals
Knocking over a fence or gate while working
Overspray damaging nearby vehicles or other property
CGL almost always includes products and completed operations coverage, which responds when a product you sold or the work you completed later leads to third-party bodily injury or property damage.
Example: The plumbing work that you completed has caused sudden water damage to a client’s property two months later. Even though the work was finished months earlier, your CGL responds with its PCO coverage, covering your legal expenses and settlement.
Some CGL policies also cover personal injury, such as slander or libel and certain advertising-related issues, like copyright infringement. But this may only apply to specific types of claims defined in the insurance policy and it generally doesn’t cover bad marketing results or intentional misconduct.
Because CGL has clear limits, some things are simply outside its scope, so you may need to carry other types of commercial insurance. These include:
What CGL doesn’t cover
Why it’s excluded
What’s usually needed instead
Fixing your own work
Redoing faulty work is considered a business cost, not an insurable loss.
No coverage for rework; CGL only applies to resulting third-party damage or injury
Damage to your own building, equipment or contents
CGL covers damage you cause to others, not losses or accidental damage to your own property.
Commercial property insurance
Lost business income
Lost revenue is not a liability claim.
Business interruption insurance
Undisclosed business activities
The insurer priced the policy based on disclosed operations, not unreported ones.
Updated CGL coverage that reflects actual operations
Professional advice or errors
Advice and professional judgment are treated as a separate risk from general business operations.
Errors and omissions (professional liability) insurance
Employee injuries
CGL covers third parties, not employees.
Workers’ compensation (e.g., WSIB in Ontario)
Employment-related claims
Claims like wrongful dismissal or harassment involve employees, not third parties.
Employment practices liability insurance
Business vehicles
Vehicle-related injuries and damage are handled under auto insurance rules.
Commercial auto insurance; non-owned auto if applicable
Cyber incidents
Data breaches and ransomware are not physical injury or property damage.
Cyber insurance
Pollution and environmental damage
Pollution risks are broader and more complex than standard CGL liability coverage allows.
Environmental (pollution) liability insurance
Alcohol-related claims
Alcohol service creates a separate, higher-risk exposure than general operations.
Liquor liability insurance
Product recalls
Recall costs relate to pulling products back, not third-party property damage or injury.
Product recall insurance
CGL policies come in two main forms: occurrence and claims-made. The difference between them mainly comes down to timing:
Occurrence
Claims-made
What matters
When the incident happened
When the claim is made
Policy must be active when
The loss occurs
The claim is filed
Retroactive date
Not used
Required
Coverage after policy ends
Yes
Only with tail coverage
If the incident happened while the commercial general liability policy was active, the policy can respond even if the claim is made years later. This is why occurrence coverage is more common for contractors, retailers and landlords.
The insurance policy must be active both when the incident happens and when the claim is made. Because these policies rely on a retroactive date, anything before that date is usually excluded. If the policy is cancelled, extended reporting (often called tail coverage) may be needed to keep protection in place.
In Canada, most small and mid-sized businesses carry CGL limits between $1 million and $5 million per claim. But that number may go up when contracts require it or if the exposure risk is higher. Here are some terms worth knowing:
Term
What it means
Per-occurrence limit
The most the policy will pay for a single claim.
Aggregate limit
The total amount the policy will pay during the policy term.
Deductible
Some CGL policies have no deductible at all, while others may include one, especially for higher-risk businesses or certain types of claims.
Defence costs
Some Canadian CGL policies pay legal defence costs outside the limit. Others include them within the limit.
Keep in mind that details may vary by insurer and province. Québec policies may also use different legal language. Speaking with an insurance broker can help make sure you have the right policy limit for your business.
A certificate of insurance (COI) is a short document that confirms you have insurance coverage in place. Clients or customers may ask to see your COI to make sure you have coverage in case something happens.
Some contracts may also require you to add another party to your policy, known as an additional insured, to make sure they’re protected if a claim comes from your work. For example, a landlord or project owner may want coverage in case they’re named in a lawsuit about your work. Where things can get tricky is that some contracts may assume you have more coverage than what a standard CGL policy actually provides. A broker can help you review your contracts to make sure you have the right amount of coverage.
CGL comes into play anytime your business could injure someone or damage their property. If a business interacts with the public, works on client sites or sells products, CGL is usually the starting point for business owners. Here's what you should know:
If customers or members of the public come onto your business premises, the risk is fairly obvious. More foot traffic means more chances for someone to get hurt.
If you work in the trades, your risk exposure is usually higher. You’re working on other people’s property, often with tools, equipment or materials that can cause damage. Claims can also show up after the work is finished.
Home-based businesses can be easy to overlook. Personal home insurance doesn’t cover business liability, especially if clients visit you or you regularly work at their homes.
While CGL doesn’t cover advice, design or professional judgment, professional services still need CGL for basic risks, like someone getting hurt during a meeting or on your premises.
Landlords typically need CGL because tenants and visitors can be injured on the property. Your property insurance handles damage to the building, but CGL handles any liability claims.
CGL premium costs can vary a lot from one business to another. Most of it comes down to how likely a claim is. For example, a quiet office where clients rarely visit would likely be priced very differently from a business that works on job sites, uses tools or deals directly with the public. When figuring out your rate, insurers look at things like:
What your business actually does
Where your business is located
How much work you do
Whether you have foot traffic
Whether you have any contract requirements
Whether you have employees or use subcontractors
Whether you’ve had claims in the past
Some low-risk office businesses in Canada may only pay a few hundred dollars a year, while higher-risk operations may pay quite a bit more, particularly if they’ve added additional liability coverage for more protection.
The Insurance Bureau of Canada (IBC) points out that the more an insurer understands your business, the easier it is to spot changes in risk and coverage needs. As your business changes, the risks change with it. That’s why it’s a good idea to review your coverage regularly with your insurer or broker.
Buying CGL through an insurance broker starts with explaining what your business actually does, including where you work and who you deal with. From there, the process usually looks like this:
Summarize your business operations by describing the services you provide and where the work takes place.
Share basic numbers such as annual revenue, payroll (if relevant) and subcontracting details.
Disclose prior claims, including any past claims, even older or smaller ones.
Review contract requirements by identifying required limits, additional insured wording and endorsements.
From there, the broker shops around with different insurance providers and compares quotes. Policies can look similar on the surface, but handle things like defence costs, exclusions and endorsements differently, so they’re comparing more than just the price. They’ll then present you with your options for you to choose from and answer any questions you may have. If you’re unsure what to prepare or what’s important to an insurer, a broker can walk you through it step by step and help you spot any issues.
You can use these questions to help you spot common gaps before the policy is in place:
Are defence costs inside or outside the limit?
Are the limits high enough for your landlords/contracts?
Do the exclusions match your actual work?
Are additional insureds required?
Is your completed work covered?
Would you rather have an occurrence or claims-made policy?
Do you understand how claims must be reported?
A CGL policy only works when it matches how your business actually operates. BrokerLink can help with that. One of our commercial insurance brokers can walk through your coverage, look at any contract requirements and help you understand where any gaps might be.
And as your local insurance brokerage with over 30 years of experience in helping Canadian business owners find affordable and personalized coverage, we can also help you find a business insurance policy that fits your exact business needs and budget.
You can reach us by phone, email or in person at any one of our locations throughout Canada. You can also check out our free online quote tool, which can provide you with a competitive quote in minutes!
