What is commercial general liability insurance and when will an insurer refuse to cover a claim in Ontario?
Commercial general liability (CGL) insurance covers a business against third-party claims for bodily injury or property damage arising out of its operations, products, or premises - the standard policy most businesses carry to respond to claims like a customer injury, accidental property damage caused by the business, or similar third-party losses. It's generally not designed to cover the cost of redoing or fixing the business's own faulty work or product itself, which is treated as an ordinary business risk rather than an insurable, unexpected loss.
Insurers commonly deny CGL claims on a few recurring grounds: the loss doesn't qualify as an "occurrence" (an accidental event, as opposed to an expected or intended result of the business's own conduct); the claim falls within a business-risk or faulty-workmanship exclusion, since fixing your own bad work isn't what CGL insures against; or a pollution or specific-activity exclusion applies. Because these exclusions turn heavily on how the loss actually happened - an accident causing damage versus simply defective work needing correction - the facts of how the loss occurred, not just what was damaged, usually drive whether a CGL denial holds up.
Key takeaways
- CGL insurance covers third-party bodily injury or property damage claims, not the cost of fixing your own faulty work.
- A recurring denial ground is that the loss wasn't an "occurrence" - an accidental event rather than the business's own expected result.
- Business-risk and faulty-workmanship exclusions are common and specifically target the cost of redoing your own work.
- Whether a CGL denial holds up usually turns on exactly how the loss happened, not just what was damaged.