Commercial general liability insurance in Canada

Ways to save on commercial general liability insurance

The actual cost of general liability insurance can range from a few hundred dollars for small businesses to over $100,000 for larger enterprises with higher risks. Commercial general liability insurance plays an important role in protecting your business and there are ways to manage your premiums without cutting back on coverage. If you’re reviewing your policy at renewal, the following steps may help keep costs in check:

Discounts

Here's what you should know:

Bundle related business policies

Placing general liability alongside other coverages, such as commercial auto insurance, commercial property coverage or cyber insurance, can help you significantly save on your overall insurance costs. Keeping multiple policies with the same insurer can also help make your policies easier to manage at renewal or during a claim.

Improve on-site safety measures

Businesses that actively address safety risks are generally exposed to fewer liability claims than those that do not. Reducing hazards can not only help lower the frequency of claims but can also support more stable general liability insurance costs over time.

Review industry or trade group memberships

If you’re a member of a trade or professional association, you may have access to group insurance programs that are not available to non-members. These programs may provide discounted pricing or coverage options that are tailored to specific industries.

Keep claims to a minimum

Businesses with few or no prior liability claims are typically viewed as lower risk than those with multiple claims on file. The longer a business goes without a claim, the more likely it is to benefit from lower premiums over time.

Savings Options

Here are ways you can save:

Select coverage limits carefully

When you choose coverage limits that are aligned with your actual operations, you’ll likely pay less than someone who purchases higher limits without needing to. By selecting an appropriate liability limit, it can help you avoid paying for coverage that you don’t necessarily need.

Increase your deductible

If you choose a higher deductible, you’ll usually pay lower premiums, as insurers often reward customers who are willing to take on more financial responsibility by lowering their insurance rates.

Train employees on safety practices

Businesses with clear safety procedures and trained staff tend to experience fewer accidents than those without formal training, which can help reduce liability claims and insurance costs over time.

Pay your premiums annually

Insurance companies will often add small administration fees to process each monthly payment. If you’re able to pay your premiums for the whole year upfront, you’ll likely avoid these added monthly fees compared to those on monthly payment plans, lowering your overall cost.

Work with an insurance broker

Business owners who work with insurance brokers often have access to more coverage options than those dealing with a single insurance company. Over time, with their market access and regular policy reviews, they can help you keep your coverage aligned with your needs and budget.

Types of additional coverage options for Canadian businesses

While coverage depends on policy wording, a standard commercial general liability insurance policy generally focuses on third-party property damage or injury claims, which means it doesn’t cover every risk a business may face. Losses related to your own property, professional services, vehicles, employees or certain operational disruptions typically fall outside the scope of this coverage. That’s why general liability insurance coverage is frequently combined with other types of business insurance to help address risks not covered by general liability, such as:

• Commercial property insurance

• Professional liability insurance

• Equipment breakdown coverage

• Sewer backup coverage

• Overland water coverage

• Earthquake coverage

• Home business insurance

• Business auto insurance

• Cyber insurance

• Employment practices liability insurance

• Crime insurance (employee dishonesty)

• Directors’ and officers’ liability insurance

• Umbrella insurance

Occurrence vs. claims-made

When you purchase commercial general liability insurance, the way your policy is structured also affects how and when claims are covered. Most CGL policies are written on either an occurrence basis or a claims-made basis. All descriptions are general in nature and subject to the specific terms, conditions, exclusions and endorsements of the policy.

Occurrence basis

With occurrence, the policy responds based on when the incident happened. If an injury or property damage occurs while the policy is active, the claim may still be covered even if it’s reported years later. This means coverage stays in place for incidents that happened during the policy period, regardless of when the claim is made. Occurrence policies are commonly used for general liability because they provide long-term protection without the need to maintain coverage after a business closes or changes insurers.

Claims-made basis

A claims-made policy responds based on when the claim is reported. For a claim to be covered, the policy must be active both when the incident occurs and when the claim is made. Unlike occurrence policies, these policies often include a retroactive date, which limits how far back an incident can occur and still be covered. As such, claims-made policies often come with lower initial premiums than occurrence-based policies because coverage only applies while the policy remains in force. A BrokerLink advisor can help you understand which option is more appropriate based on how your business operates and how long you want coverage to remain in place.

How to choose the right liability limits for your business

Choosing the right commercial general liability limit comes down to how your business operates and what’s expected of you. Start with any contract requirements, such as limits set by landlords or clients. Then, you’ll want to consider things like:

• How often you interact with the public

• Whether your work involves job sites, heights or hazardous environments

• The size and value of your projects

• Whether you’ve had past liability claims

As a general rule, many small business owners carry $2 million in coverage as a baseline, but businesses with higher public exposure or stricter contract requirements often increase to $5 million or more. Depending on the policy, that coverage may be structured in several ways, including:

• $5 million per occurrence with a $10 million policy limit

• $2 million limit per occurrence with a $2 million per aggregate limit

• $2 million limit plus a $3 million umbrella policy, totalling $5 million per occurrence

For example, the City of Toronto’s film permitting system lists $2 million in commercial general liability and requires the City to be named as an additional insured. Further, it also recommends that BIAs carry $5 million per occurrence for commercial general liability.

If your business is larger or involves higher-risk operations, you may also want to add umbrella coverage for additional protection. A BrokerLink advisor can help you decide what limits make the most sense for your business.

How is per-occurrence different from the CGL policy limit?

A per-occurrence limit is the maximum amount a CGL policy will pay for a single claim or incident. Your policy will also have an overall policy limit, sometimes called an aggregate limit, which is the maximum amount the insurer will pay for all covered claims during the policy period.

For example, a policy with a $5 million per-occurrence limit and a $5 million aggregate limit could pay up to $5 million for a single large claim or for several smaller claims that add up to $5 million during the policy period. If the same policy instead carried a $5 million per-occurrence limit with a $10 million aggregate, it could cover one large $5 million claim and still have another $5 million available for additional claims, including another large loss. But once the aggregate limit is reached, no further claims will be paid until the policy renews.