Commercial General Liability (CGL) Insurance

CGL is third-party insurance. It does not pay for your own property or your own lost income. It pays other people when your business is legally liable to them, and it pays the lawyers who defend you, whether or not the claim has merit.

The Insurance Bureau of Canada publishes a standard CGL wording, known as IBC 2100, and insurers' own forms follow a similar structure. CCDC construction contracts and federal contract schedules set IBC 2100 as the minimum a contractor's policy must match. The policy is divided into separate coverages, each with its own insuring agreement, exclusions and limit.

The products and completed operations hazard sits inside Coverage A. It covers injury or damage that happens away from your premises after your product has left your hands or your work is finished. Makers, importers and retailers should read our product liability insurance guide, which covers that exposure in depth.

Almost every business that deals with the public, works at other people's premises, or sells a physical product. The requirement usually arrives in writing before the risk does:

Canadian CGL applies to bodily injury and property damage that occurs during the policy period. It must be caused by an occurrence, which standard wordings define as an accident, including continuous or repeated exposure to substantially the same harmful conditions. The date the claim is made does not decide which policy responds. The date of the injury does.

That matters because liability claims arrive late. In Ontario, the Limitations Act, 2002 gives a claimant two years from the day the claim was discovered to start a lawsuit, subject to an ultimate limit of 15 years from the act or omission. A contractor's 2024 policy can be the one that answers a 2027 lawsuit over a 2024 injury. Keep every old policy, and keep the same broker records you would want a lawyer to see.

Professional liability, cyber and directors' and officers' policies usually work the other way, on a claims-made basis: the policy in force when the claim is first made responds, subject to a retroactive date. Moving between the two systems without care is how gaps open. Our post on CGL vs. professional liability shows which claims land on each.

A CGL declarations page shows several limits, not one. Each caps a different thing, and contracts specify them separately.

Defence costs are paid under supplementary payments, and standard wording says those payments do not reduce the limits. A $2 million limit is $2 million for damages, with defence on top. The insurer's duty to defend ends once the applicable limit has been paid out in judgments or settlements.

A deductible on CGL, where there is one, typically applies to property damage claims, either per claim or per occurrence. A per-claim deductible applies again to each claimant from the same event. For limits above what a primary insurer will write, an umbrella policy sits over the CGL, auto and employer's liability.

A landlord, general contractor, municipality or customer will often ask to be added to your policy as an additional insured. That gives them direct rights under your CGL for liability arising out of your operations or your premises, so a claim against them over your work is defended by your insurer rather than theirs.

Two clauses make this work. Separation of insureds, also called cross liability, applies the policy as if each insured had its own policy, so one insured can claim against another. Blanket contractual liability covers the tort liability you assume under a written contract, such as a lease or service agreement, made before the injury happened. Both are in standard wordings, and contracts commonly require both to be shown.

Proof comes on a certificate of insurance. A certificate summarizes coverage; it does not change it. If a contract requires 30 days' notice of cancellation, a waiver of subrogation or a specific additional insured wording, that has to be added to the policy by endorsement. Our article on why contracts ask for a certificate explains what each request means.

Slip, trip and fall claims are the backbone of CGL, and in Ontario they turn on the Occupiers' Liability Act. Section 3 requires an occupier to take such care as is reasonable in all the circumstances to see that people entering the premises, and the property they bring, are reasonably safe. The duty applies whether the danger comes from the condition of the premises or from an activity carried on there.

Occupier is defined broadly. It includes whoever is in physical possession and whoever has responsibility for and control over the premises or the activities there, and there can be more than one. A landlord, a tenant and a property manager can all be defendants in the same fall. Under section 8, a landlord responsible for maintenance or repair owes the same duty for its failures. Other provinces have their own occupiers' liability statutes or common-law rules with a similar reasonableness standard.

The defence in these claims is evidence. Inspection logs, salting records, incident reports and photographs decide more falls than policy wording does. Our post on snow contracts and slip-and-fall liability covers the practical steps.

CGL is broad, but it is built to sit beside other policies, not replace them. Each exclusion below points to the coverage that is meant to respond.

Your coverage territory matters too. It varies by wording: the specimen form we cite defines the territory as Canada and excludes suits brought in the United States, while other wordings extend further on conditions. If you travel, ship or work outside Canada, confirm the territory in writing. Our cross-border insurance page covers the options. For a clause-by-clause walk through, read our guided tour of the CGL policy.

This scenario is hypothetical and simplified. A customer slips on ice outside a leased retail unit in Ottawa in February and breaks a wrist. She serves written notice on the tenant 40 days later, inside the 60-day window, and sues the tenant, the landlord and the snow removal contractor.

The tenant's CGL responds under Coverage A and appoints defence counsel. The lease names the landlord as an additional insured for liability arising out of the tenant's premises, so the landlord tenders its defence to the tenant's insurer too. The snow contractor's own CGL defends the contractor, and its contract with the landlord decides how fault is shared. Ontario's Negligence Act, which the Occupiers' Liability Act applies to these claims, lets the court apportion fault among all three.

Defence costs come on top of the $2 million limit. Medical payments under Coverage C could have paid her immediate costs without any finding of fault, which sometimes heads off a claim altogether. The tenant's records of salting and inspection that morning are the strongest evidence it has.

CGL is rated on an exposure base multiplied by a rate for your class of business. The exposure base is usually annual revenue, but it can be payroll for trades, square footage for premises-heavy risks, or units for property owners. The rate reflects how often and how badly businesses like yours generate claims.

Market conditions also count. Marsh's Global Insurance Market Index put overall Canadian commercial rates down 6% in the third quarter of 2026, which means a well-prepared submission has room to negotiate. Many small businesses buy CGL with property in one package; see small business insurance.

Insurabiz is an independent brokerage that works only in business insurance. CGL looks like a commodity, but the class description and the endorsements decide whether a claim is paid.

Our claims team stays involved from first notice to settlement.