Definition
General Liability Insurance (often called Commercial General Liability or CGL) is a policy that protects property owners, landlords, and businesses against claims involving bodily injury, property damage, and related legal defense costs arising from their operations or premises.
What It Typically Covers
- Bodily Injury: Slip-and-fall accidents, injuries on premises.
- Property Damage: Damage to third-party property.
- Personal & Advertising Injury: Libel, slander, certain media-related claims.
- Legal Defense Costs: Attorney fees and court expenses (often outside limits, depending on policy).
What It Usually Does NOT Cover
- Damage to the insured’s own property (covered under property insurance).
- Professional errors (requires professional liability/E&O policy).
- Employee injuries (covered under workers’ compensation).
- Intentional misconduct.
Why It Matters in Real Estate
Real estate ownership carries premises liability risk. Tenants, guests, contractors, and vendors regularly enter and use property. General liability insurance protects investors from catastrophic financial exposure tied to accidents.
- Protects cash flow from unexpected claims
- Required by lenders
- Supports asset-level risk management
- Often required in leases and vendor contracts
Typical Policy Limits
- $1,000,000 per occurrence
- $2,000,000 general aggregate
- Umbrella or excess policies may increase limits
Interaction With Other Risk Tools
- Additional Insured – Extends coverage to landlords or owners.
- Hold Harmless Agreement – Contractually allocates liability.
- Waiver of Subrogation – Prevents insurers from suing counterparties.
Example
A tenant slips on icy stairs at an apartment complex and sustains injuries. The tenant files a claim alleging negligent maintenance. The property owner’s general liability policy would typically provide defense and pay covered damages, subject to policy terms and limits.
Common Pitfalls
- Insufficient policy limits for asset size.
- Failure to add umbrella coverage.
- Not requiring tenants or contractors to carry their own CGL coverage.
- Overlooking exclusions tied to specific operations.
- Letting policies lapse due to missed renewals.
Investor Checklist
- Confirm policy limits align with asset risk profile.
- Require tenants and vendors to carry CGL coverage.
- Verify additional insured endorsements are in place.
- Review exclusions annually.
- Coordinate umbrella policy limits with lender requirements.