Commercial General Liability (CGL) Insurance in India – Complete Guide
Last Updated: August 2025
What is Commercial General Liability Insurance?
Commercial General Liability (CGL) Insurance is one of the most crucial risk management tools for businesses in India. It protects companies from financial losses due to legal liabilities arising from bodily injuries, property damage, or personal and advertising injuries caused to third parties.
In India, the Insurance Regulatory and Development Authority of India (IRDAI) governs the issuance and compliance of liability policies. Businesses in sectors like manufacturing, construction, retail, healthcare, and events are increasingly opting for CGL policies to safeguard against unforeseen claims.
What Does a CGL Policy Cover?
- Bodily Injury: Covers medical expenses and legal costs if a third party suffers injury on your premises.
- Property Damage: Pays for repairs or replacement if business activities cause damage to someone else’s property.
- Personal & Advertising Injury: Includes claims related to defamation, copyright infringement in advertisements, and reputational harm.
- Legal Defense Costs: The policy typically covers court fees, lawyer charges, and settlements within the policy limit.
Why Do Indian Businesses Need CGL Insurance?
Indian businesses face growing risks due to strict consumer laws, increased awareness of rights, and high litigation costs. A single lawsuit can cause significant financial strain, especially for small and medium enterprises.
Some situations where CGL insurance becomes essential include:
- Customer injury in a store or office premises
- Damage to client property during service delivery
- Advertising content disputes leading to legal notices
Additionally, many contracts and government tenders require proof of liability coverage before awarding projects.
Common Exclusions in CGL Policies
Understanding exclusions is critical to avoid claim rejection. Common exclusions include:
- Employee injuries (covered under Workmen Compensation)
- Professional negligence (covered under Professional Indemnity)
- Automobile accidents (covered under Motor Insurance)
- Pollution and environmental damage unless specifically added
- Contractual liabilities beyond normal scope
How is the Premium Calculated?
The cost of a CGL policy in India depends on multiple factors:
- Business Type: High-risk sectors like construction or chemical manufacturing pay higher premiums.
- Turnover: Larger turnover typically means higher exposure and cost.
- Coverage Limit: Policies start from ₹50 lakh and can go up to ₹100 crore depending on requirement.
- Claim History: Businesses with a clean record may get better rates.
Frequently Asked Questions (FAQs)
Is CGL Insurance Mandatory in India?
No, it is not legally mandatory for all businesses. However, many clients, landlords, and tenders require it for contractual compliance.
Does it cover product liability?
Yes, many CGL policies include product liability cover, but you must verify this with the insurer before purchase.
What to do when a claim arises?
Notify your insurer immediately, document the incident with photos/videos, and provide all required details for a smooth settlement.
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