A BUSINESS OWNERS GUIDE TO COMMERCIAL INSURANCE
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Maryland Insurance Administration • 800-492-6116 • www.insurance.maryland.gov
• Avoid shoddy repairs and workmanship by using licensed, reputable contractors. Be sure they
secure the appropriate building permits. Beware of contractors requiring a large payment up
front or whose bids are amazingly low. Check with the appropriate licensing agency to make
certain the contractor you are planning to use for the repairs has a valid license.
• You should contact your insurance company and claims adjuster any time you nd additional
damage not previously reported and inspected, or if you have more information concerning
the claim.
LIABILITY INSURANCE
Liability Insurance, also called Commercial General Liability (CGL) insurance, protects your business
against the economic loss and expense associated with claims led against your business for bodily
injury, property damage, injury to reputation caused by slander and libel, and also the harm caused
by false or misleading advertising. Bodily injury claims include claims for damage that results when
someone falls while visiting your business or one of your products falls on the person. It can, depending
on the language of the policy, also include coverage for claims of damage that occurs as a result of your
business operations. For example, if your business serves food, this may include the cost of medical tests
to detect hepatitis because of contamination due to food-handling. Property damage includes property
belonging to someone else that is physically damaged or lost by your business. Whether a particular
loss or expense is covered, will depend on the source of damage and the language of your policy.
For example, damage to business inventory belonging to another person or business while in your
possession, may be a covered loss if it is damaged from an accidental re, but the same damage might
not be covered if the inventory is damaged by ood waters and the policy does not provide coverage for
ood-related damage. e scope of coverage available under your policy will depend upon the policy
and endorsements you select, so be sure to discuss all of your concerns with your insurance producer
and to learn about all of the dierent types of coverages available for purchase.
A CGL policy is advantageous for two reasons. First, the insurer will defend you against any covered
claim at no out-of-pocket cost to you. Second, if your business is found responsible, the insurer will
pay at least part of, and maybe even all of, the damages owed. e amount the insurer will pay depends
upon (1) the amount of damages, and (2) the type of damages sought. When a valid claim is made,
the insurer will pay up to the stated maximum. If the claim for damages is greater than the policy
maximum, you as the policyholder are liable for the balance. Also, while most CGL insurance policies
provide coverage for compensatory and non-compensatory damages, punitive damages are typically
not covered. Compensatory damages include expenses incurred by the claimant as a result of the injury,
such as the cost of medical services and lost wages from missing work, as well as projected future losses
and expenses. Non-compensatory or general damages include non-monetary losses suered by the
injured party, such as “pain and suering” or “mental anguish.” Punitive damages are additional monies
awarded as a penalty and sanction against the defendant as a form of punishment for its actions.