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Insurance & Bondingaka: CGLaka: general liability

Commercial General Liability (CGL)

In Plain English

The basic insurance policy that protects a contractor if someone is hurt or property is damaged because of their work.

Definition

Commercial general liability insurance is the standard liability policy carried by contractors that covers third-party bodily injury, property damage, personal injury, and advertising injury arising from the contractor's operations, products, and completed work. CGL policies are structured with per-occurrence limits, general aggregate limits, and a products/completed operations aggregate. Most construction contracts require a minimum CGL policy as a condition of award.

Why It Matters in Bidding

CGL limits and endorsements are a gating requirement in most bid packages, so a contractor whose policy falls short of the spec'd limits or lacks additional-insured wording can be deemed non-responsive and passed over at award. Estimators must also price CGL premiums into general conditions and overhead, since carrying higher limits or wrap-up coverage directly affects the markup applied to the bid.

Example

Before submitting on a hospital addition, an estimator confirms the company's $1M-per-occurrence/$2M-aggregate CGL meets the owner's spec'd limits and orders an additional-insured endorsement so the bid won't be rejected as non-responsive.

Related Terms

General AggregatePer Occurrence LimitUmbrella Policy

Frequently Asked Questions

Owners commonly specify the minimum per-occurrence and aggregate limits in the insurance section of the bid documents, often requiring higher limits on larger or higher-risk projects. Contractors who can't meet the stated minimums must buy up coverage or secure an umbrella policy before award, and that added premium should be carried in general conditions.
CGL is designed to cover resulting third-party bodily injury and property damage, not the cost to rework a contractor's own defective work. Repairing the bad work itself is typically excluded, though damage that defect causes to other property may be covered. Estimators should not assume CGL eliminates rework risk when pricing scope.
An additional insured endorsement extends a contractor's CGL to protect the owner or upstream GC against claims arising from the contractor's work. Owners and GCs require it so they're defended under the subcontractor's policy. Estimators should confirm subs can provide the endorsement, since missing it can stall award or trigger a chargeback.

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