Commercial general liability (CGL) insurance is designed to protect your business if someone who isn’t your employee claims your business activities injured them or damaged their property. It helps pay your legal defence costs and any settlement or court award. You’ll also hear it called general liability or business liability insurance.
Those third-party claimants can include customers, clients, delivery people, or members of the public.
Examples: a customer visiting your shop slips on a wet floor and breaks their wrist. Or a trade professional accidentally damages a client’s home, or the building next door, while completing a project. In both scenarios, a CGL policy helps cover the cost of third-party injuries and property damage stemming from your day-to-day business operations.
How Much Is CGL Insurance for Small Businesses in Canada?
CGL insurance for a Canadian small business may start around $600 a year for a policy with a $2 million coverage limit. Your price could land higher or lower depending on your risk.
Most insurers offer limits of $1 million, $2 million, or $5 million. Many commercial leases and client contracts set a minimum, often $2 million or more.
Insurers look at several factors when pricing your policy, including:
- Your location, what your business does, and the industry you’re in
- Whether clients visit your premises and how much foot traffic you get
- The coverage limit and deductible you choose
- Any contracts that require specific coverage or limits
- How many employees or subcontractors work for you (if applicable)
- Your annual and gross projected revenue
- How long you’ve been in business
- Your insurance claim history
The best way to know how much CGL insurance will cost your business is to get a free quote. It takes about three minutes.
What Does Commercial General Liability (CGL) Insurance Cover?
CGL insurance covers four main types of third-party claims. It also pays your legal defence costs and any damages you’re found liable for, up to your policy limit.
- Third-party bodily injuries (injuries to non-employees)
Covers injuries to people who aren’t your employees, including clients, delivery people, and passersby, whether they’re hurt on your premises or because of work you do elsewhere. Most policies also include medical payments coverage, which pays an injured person’s medical bills, up to a small limit, no matter who’s at fault. - Third-party property damage (damage to someone else’s property)
If you or one of your employees accidentally damages someone else’s property, either on your premises or while working on the job, CGL insurance may cover the cost to repair or replace it.
For example, you might pierce a water pipe while drilling into a wall, scuff a customer’s floor during a delivery, spill bleach on a client’s rug while cleaning, or damage a neighbouring property while servicing your client’s.
One catch: property in your care, custody, or control, such as a client’s laptop you’ve taken back to your shop for repairs, usually isn’t covered. A broker can add coverage for customers’ property if you need it. - Products and completed operations
Most CGL policies include products and completed operations coverage. If yours doesn’t, a broker can add it. Sometimes called product liability insurance, it responds when a product you made, sold, or distributed, or work you finished at a client’s location, injures someone or damages their property, even weeks or months later.
Here’s the fine print: it covers the damage your product or work causes, not the cost to fix or replace the product or work itself. Say a loose fitting on a dishwasher you installed floods a client’s kitchen two months later. CGL can cover the water damage, but not the cost of redoing the installation. - Personal and advertising injury
This part of your CGL policy responds to claims of libel or slander (defamation), invasion of privacy, or copyright infringement in your advertising, like using a photo you don’t have the rights to in a social media ad. It can also cover claims of false arrest or wrongful eviction, which matter if you run a retail store or rent out property.
What Doesn’t (CGL) Insurance Cover?
CGL insurance typically doesn’t cover the following. Each of these risks needs its own policy or endorsement:
- Damage to your own building, equipment, or contents (you may need commercial property insurance)
- Lost revenue following an insurable loss (you may need business interruption insurance)
- Mistakes in the professional services or advice you provide (you may need professional liability insurance, also called errors and omissions (E&O) insurance)
- Vehicles you own or use for business (you need a commercial auto insurance policy)
- Employee injuries (you may need provincial workers’ compensation insurance to cover injuries to employees; business owners may need employers’ liability insurance)
- Cyber incidents and data breaches (you may require cyber liability insurance)
- Environmental damage caused by pollution (you may need pollution liability insurance)
- Liquor-related claims if you sell or serve alcohol (your business may need liquor liability insurance)
- Product recalls (you may need product recall insurance)
- Employment disputes, such as wrongful dismissal or harassment claims (you may need employment practices liability insurance)
- Contractual liability (may require contractual liability insurance)
- Intentional damage, criminal acts, and fraud
Occurrence-Based vs. Claims-Made CGL Insurance: What’s the Difference?
CGL insurance comes in one of two forms: occurrence-based or claims-made. The key difference is timing: when the incident happened versus when the claim is filed. Most CGL policies sold in Canada are occurrence-based.
- Occurrence-based policies: If the incident happened during your policy period, the policy will respond, even if the claim comes in years later and you’ve since switched insurers. Because of this lasting protection, occurrence-based coverage is typically favoured by contractors, commercial landlords, and retail business owners.
- Claims-made policies: A claims-made policy only responds if the claim is made while your coverage is active and the incident happened on or after your policy’s retroactive date. Events before that date are typically excluded. If your coverage lapses or you cancel it, you’ll need an extended reporting period endorsement, often called tail coverage, to stay protected against claims that surface later.
Who Needs Commercial General Liability (CGL) Insurance?
Your small business likely needs CGL insurance if you:
- Have an office, storefront, or other commercial space
- Run a home-based business (home insurance usually won’t cover business-related claims)
- Visit client homes, offices, or job sites
- Work off-site at events, markets, or other locations
- Sign leases or client contracts
CGL insurance isn’t legally required for most businesses in Canada. But it’s often required on paper. Landlords, clients, general contractors, and event organizers commonly ask for proof of coverage, usually a certificate of insurance, before you sign a lease, land a contract, or start a job.
Examples of businesses that need this coverage include:
- Construction and renovation contractors and skilled trades professionals
- Retailers and hospitality businesses
- Home-based businesses in any industry
- Professional services firms that meet clients in person, at your office or theirs
- Commercial and residential landlords
- Fitness, wellness, and beauty professionals
Commercial General Liability (CGL) Insurance Frequently Asked Questions
Is CGL insurance mandatory in Canada?
No law requires most Canadian small businesses to carry CGL insurance. In practice, though, you’ll often need it. Landlords usually make it a lease condition, and many clients, general contractors, and event organizers won’t work with you until you show proof of coverage.
Is general liability insurance the same as CGL insurance?
Yes. General liability, business liability, and commercial general liability (CGL) insurance generally refer to the same coverage. All three protect your business against third-party claims of bodily injury, property damage, and personal and advertising injury.
What’s the difference between CGL and professional liability insurance?
CGL covers physical harm: injuries and property damage you cause to others. Professional liability, or errors and omissions (E&O) insurance, covers financial losses a client blames on your advice, services, or mistakes. Many service-based businesses carry both.
How much CGL coverage do I need?
Many Canadian small businesses start with a $2 million limit. If a lease or client contract calls for more, such as $5 million, your policy has to meet it. A broker can help you match your limit to your risk and your contracts.
Does CGL insurance cover home-based businesses?
Yes. A CGL policy fills the gap your home insurance likely leaves for business-related claims. If a client trips on your front steps during a meeting, or a product you sell injures someone, CGL insurance can respond.
Get a Free Commercial General Liability (CGL) Insurance Quote in Minutes
One injury or property damage claim can cost far more than a year of coverage. Commercial general liability (CGL) insurance is vital protection for Canadian small business owners and self-employed professionals in any industry.
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