If you run a business in Ontario, commercial general liability insurance, often shortened to CGL, is usually the first business policy people ask about. It is also one of the most misunderstood. Many owners assume it covers almost any problem that touches their business, but it covers a specific set of liability risks and leaves other risks to different policies. Knowing where that line sits can prevent a difficult surprise after an incident.
What CGL is, in plain terms
A CGL policy is designed to respond when your business is held legally responsible for injury to another person or damage to another person's property, in connection with your operations. The key word is liability. The policy is not there to pay for your own property, your own mistakes in professional advice, or injuries to your own employees. It is there for claims made against you by someone else, such as a customer, a visitor, or a member of the public, when your business is blamed for the harm.
What it typically covers
The most common part of CGL is coverage for bodily injury and property damage to third parties. If a customer slips on a wet floor in your shop and is hurt, or if work you do accidentally damages a client's property, a CGL policy is typically the first place to look. It usually includes the cost of defending the claim, as well as damages the business is legally required to pay, up to the policy limit and subject to the wording.
Many CGL policies also include coverage for personal injury and advertising injury. Despite the name, this is not about injuries to the body. It usually covers claims such as libel or slander in your advertising, or claims that your business used someone else's advertising idea. It is narrower than many owners expect, so ask your broker what it actually includes.
CGL can also include coverage for products and completed operations. For a business that sells products, this usually responds when a product causes injury or property damage after it has left your hands. For a contractor, it usually responds when completed work later causes injury or damage to someone else. Work still in progress is often treated differently from finished work.
What it typically does not cover
Professional mistakes are a common gap. If a client claims a financial loss because of advice, design work, or a professional service you provided, that kind of claim is typically handled by professional liability or errors and omissions insurance, not by a CGL policy.
Injuries to your own employees are another common gap. Workplace injuries in Ontario are usually handled through the workers compensation system, not through a CGL claim by an employee against their own employer. CGL is built around claims by third parties, not around the employer and employee relationship.
Your own property is also generally outside CGL. Damage to your own building, equipment, stock, or tools is typically a commercial property matter, not a liability matter. Damage caused by a business vehicle is typically handled under a commercial auto policy, not under CGL. Intentional acts are typically excluded, and pollution, cyber incidents, and employment disputes are usually handled by separate, specialized policies.
Why clients and contracts often ask for it
Even if no law requires your business to carry CGL, many customers, landlords, and general contractors will ask for proof of it before they work with you. A certificate of insurance is often requested as part of a contract, and the contract may ask for a particular limit or for the other party to be added as an additional insured. That does not change what the policy covers, but it does make CGL a practical requirement for winning work in many sectors.
If a contract asks for specific wording, do not assume your current policy already meets it. Bring the contract to your broker before you sign, and ask whether your policy can be endorsed to meet the requirement. An additional insured endorsement, for example, usually applies only to liability arising from your operations, not to the other party's own mistakes.
What to check before you renew
A useful renewal review starts with your operations, not with your premium. Has your business added a new service, taken on subcontractors, started selling a new product, or moved into a new location? Each change can affect whether your current CGL wording still fits. Tell your broker about changes like these, even if they seem small, because a policy written for last year's business may not describe this year's business.
Next, look at your limits and your deductible, and ask what defence costs do to the limit. On some policies, defence costs are paid in addition to the limit. On others, they reduce the limit available to pay a claim, which changes how much protection is left after a long dispute. Also ask about exclusions that matter for your trade, such as work done by subcontractors or products you import or distribute.
Finally, ask what is not on the policy that you assumed was there. Many business owners discover gaps only after a claim, when it is too late to fix them. A short conversation about what CGL does not cover, and which separate policies might fill those gaps, is often more valuable than a comparison of premiums alone.
The bottom line
Commercial general liability insurance is a foundation policy for many Ontario businesses, but it is not an all purpose safety net. It typically covers third party bodily injury, property damage, and certain advertising related claims arising from your operations, up to the policy limit. It typically does not cover professional mistakes, employee injuries, your own property, auto liability, or intentional acts. Reviewing your policy when your business changes is the practical way to make sure the coverage you pay for matches the risks you actually run.
Related coverage: The Coverage Gaps Ontario Small Businesses Discover Too Late.