What Is Commercial General Liability (CGL) Insurance?
Commercial general liability (CGL) insurance is the cornerstone of any business insurance program. It protects your business against third-party claims for bodily injury, property damage, and personal injury that arise from your business operations, products, or premises. If a customer slips in your store, if you accidentally damage a client’s property while on-site, or if someone sues your business over an advertising dispute, your CGL policy is what responds.
For most Ontario businesses, CGL isn’t just recommended — it’s a practical requirement enforced through commercial leases, client contracts, and industry standards.
What Does CGL Insurance Cover?
- Bodily injury to third parties: Medical costs and legal damages if someone is injured due to your business activities.
- Property damage: Costs to repair or replace a third party’s property damaged by your business.
- Personal and advertising injury: Claims related to libel, slander, copyright infringement, or false advertising.
- Legal defence costs: Attorney fees, court costs, and settlements — even if the claim against you is groundless.
- Products and completed operations: Coverage for damage or injury caused by your products or work after it has been delivered or completed.
How Much CGL Coverage Do Ontario Businesses Typically Need?
There is no one-size-fits-all answer, but there are clear benchmarks that apply to most businesses:
$1 Million Per Occurrence / $2 Million Aggregate
This is the most common CGL structure for small to mid-sized businesses in Ontario. The “per occurrence” limit is the maximum your insurer will pay for any single claim, while the “aggregate” limit is the total the insurer will pay across all claims during the policy year. For many low-to-medium risk businesses, this level of coverage meets both contractual requirements and provides adequate protection.
$2 Million Per Occurrence / $4 Million Aggregate
Higher-risk businesses — including contractors, manufacturers, and businesses with significant public foot traffic — often require or benefit from higher limits. Government and large corporate contracts in Ontario frequently specify a minimum of $2 million per occurrence.
$5 Million and Above
Large-scale construction projects, businesses with significant product exposure, or those working with major institutional clients may need $5 million or more. This is typically achieved through a combination of a primary CGL policy and a commercial umbrella policy that sits above it.
Key Factors That Determine How Much You Need
Contract and lease requirements
Before anything else, review your existing and anticipated contracts. Many commercial leases in Ontario require tenants to carry a minimum of $2 million in CGL coverage. Government procurement contracts often specify $2 million per occurrence as a baseline. These requirements set your floor.
Industry and nature of operations
A management consultant working from a home office has a very different risk profile than a plumber working in client homes or a restaurant serving hundreds of customers daily. Higher physical interaction with the public or with client property generally warrants higher limits.
Business size and revenue
Larger businesses with more employees, more client touchpoints, and higher revenue have greater exposure to liability claims and should carry higher limits accordingly.
Your ability to absorb uninsured losses
Consider what your business could realistically handle if a claim exceeded your coverage. If a judgment of $1.5 million would be financially catastrophic, carrying only $1 million in coverage is a meaningful gap.
What CGL Does Not Cover
Understanding the limits of CGL is just as important as understanding what it covers. CGL does not cover:
- Professional errors or omissions (covered by E&O / professional liability insurance)
- Employee injuries (covered by WSIB)
- Commercial auto accidents (covered by commercial auto insurance)
- Intentional acts or criminal conduct
- Damage to your own property or equipment
- Cyber incidents or data breaches (covered by cyber liability insurance)
Should You Consider a Commercial Umbrella Policy?
If your risk profile warrants higher limits than your primary CGL policy provides, a commercial umbrella policy is an efficient and cost-effective solution. An umbrella policy provides additional liability limits — typically $1 million to $10 million — that sit above your primary CGL (and often your commercial auto and employer’s liability) policies. Umbrella coverage is usually significantly less expensive per million dollars of coverage than increasing your primary policy limits.
Conclusion
For most Ontario businesses, starting at $1 million per occurrence with a $2 million aggregate is a reasonable baseline — but your actual needs depend on your contracts, industry, and risk exposure. The commercial insurance specialists at LMBF will assess your specific situation, review your contractual requirements, and recommend the right CGL limits to keep your business protected and compliant.
