Does Commercial General Liability Insurance Cover Fire?

Commercial general liability (CGL) insurance can be an important risk management tool for businesses of all sizes. A commercial general liability insurance policy covers certain claims that arise in the course of doing business. In this article, we delve into whether a CGL policy covers claims arising from fire, which can be a common business concern. Additionally, we will explore the coverages typically offered by CGL insurance policies and how it may help your business.

Understanding Commercial General Liability Insurance

A CGL policy is a common type of business insurance coverage. It helps provide financial protection to businesses against third-party claims for bodily injury, property damage, and personal or advertising injury. It can help businesses cover the costs and expenses related to legal defense, settlement, or judgment if they are found liable for such claims.

By having a CGL policy in place, businesses may feel more confident to focus on their core operations. It may offer businesses peace of mind and can help them maintain financial stability in the face of potential liability.

Exploring What Commercial General Liability Policies Typically Cover

While the terms, conditions and exclusions of each policy may vary, commercial general liability insurance policies typically provide coverage for third-party claims alleging bodily injury, property damage and personal and advertising injury. A third party is someone other than the policyholder, who may bring a claim against the policyholder for damages. Third-party liability coverage helps protect businesses if a third party, such as a customer or visitor, files a covered claim arising from the business's operations. Let’s explore the three main coverages that are typically covered by commercial general liability insurance policies.

Coverage for bodily injury claims under a commercial general liability insurance policy helps provide coverage for businesses if a third party sustains physical harm or injury due to the business's operations.

Coverage for property damage claims helps provide financial protection for businesses if they are found liable for causing damage to a third party’s property during their normal business activities.

Coverage for personal and advertising injury claims under a commercial general liability insurance policy helps protect businesses from financial liability arising from claims such as libel, slander, false arrest, copyright infringement, or invasion of privacy. This coverage helps businesses cover the costs of legal defense, settlement, or judgment if they are found liable for such claims related to personal or advertising injury.

Medical payments coverage can also be included under a commercial general liability insurance policy. This coverage helps provide financial protection to businesses by covering the medical expenses of a third party who sustains bodily injury on the insured business’s premises or as a result of the business's operations, regardless of whether the business is responsible for the injury.

What Does a Commercial General Liability Policy Typically Not Cover?

The terms, conditions and exclusions of a particular policy may vary; however, commercial general liability insurance policies typically do not cover the following claims (this list is for example only and does not address all the claims which may not be covered under a CGL policy):

Professional liability: Claims arising from the rendering of professional services or advice by the insured business would typically be covered by professional liability insurance instead. Learn more about the difference between professional liability and commercial general liability.

Employee bodily injury or illness: An injury to the insured business’s own employees would typically be covered under a workers' compensation insurance policy, which generally covers injuries or illnesses sustained by employees in the course of their employment.

Intentional acts: Intentional acts or deliberate harm caused by the insured business or its employees is typically excluded under CGL policies. This may include claims for fraud, assault, or intentional damage to property.

Damage to insured property: As a third-party coverage, CGL policies generally do not cover damages to the insured business's own property. A commercial property insurance policy or a commercial fire insurance policy may be explored to address this type of claim.

Pollution and environmental damage: Pollution-related claims or environmental damage are typically excluded under standard CGL policies.  Separate pollution liability insurance policies may be explored in order to address this type of risk.

Does Commercial General Liability Insurance Cover Fire?

Commercial general liability insurance policies typically cover third-party claims for bodily injury and property damage caused by the insured business. If a fire originating from a business spreads and causes damage to another business, the CGL policy of the responsible business should typically cover any resulting covered damages of the affected business.

However, commercial general liability insurance policies typically do not provide coverage for damages due to fire suffered by the insured business itself (these types of claims may be covered under separate commercial property or fire insurance policy.)

Businesses may want to explore both commercial general liability insurance policy options as well as and commercial property insurance options to help ensure coverage for various risks and perils. Obtaining a business owner’s policy (BOP) may be a convenient way for a business to secure both commercial general liability insurance and commercial property insurance in one policy. Learn more about the difference between BOP insurance and CGL insurance.

Preventable Fires Caused by Negligence

While CGL policies typically cover loss caused by the insured’s negligence, some policies may have specific exclusions that relate to fire claims, such as those that may have been preventable. Some ways a business can help avoid fires include:

Implementing fire safety measures, such as installing fire alarms, fire extinguishers, and sprinkler systems. Regular inspections and maintenance of these systems are also important to help ensure proper functioning.

Conducting fire safety training for employees, teaching them how to handle fire emergencies, prevent fires, evacuate safely, and use fire extinguishers. This can help prevent accidental fires and minimize the risk of negligence.

Regularly inspecting and maintaining equipment that can potentially cause fires, such as electrical systems, machinery, and heating systems. This helps identify any potential hazards or malfunctions that could lead to fires and allows for timely repairs or replacements.

Complying with local fire codes and regulations is important for businesses. Staying up to date with these codes and ensuring compliance are important risk mitigating steps that a business can take.

By implementing these measures and others advised by fire safety professionals, businesses can help reduce the risk of fire incidents and demonstrate a commitment to fire safety, ultimately helping to avoid fires.

The Bottom Line

While commercial general liability insurance policies help provide coverage for liability arising from certain third-party claims, it typically does not cover claims for fire damage to the business’s own property. Understanding the coverage offered by CGL insurance policies is vital for businesses to help assess their risk exposure accurately and consider additional coverage options, when necessary. It is always important to carefully review the policy's terms, conditions, and exclusions.

If you’re ready to explore CGL insurance policy options for your business, request a commercial general liability insurance quote or contact us to learn more about the coverages that may be right for your business.