Illinois Casualty Insurance State Practice Exam

What does a Commercial General Liability (CGL) policy cover?

1. Only reported hazards during the policy term

2. Legal liability for a business and new hazards as they arise

3. Personal injury claims against the business

4. Only physical property damages

The correct answer is: Legal liability for a business and new hazards as they arise

A Commercial General Liability (CGL) policy is designed to provide broad coverage for businesses against various liability risks they may face. The key aspect of this policy is that it covers legal liability for a business, which means it protects the business against claims for bodily injury, property damage, personal injury, and advertising injury resulting from the business's operations, products, or premises. One of the fundamental features of a CGL policy is that it extends coverage not just for the specific risks that are known at the time of policy issuance but also for new hazards that may arise during the policy term. This means that if a business engages in new activities or encounters unforeseen risks, the CGL can still provide coverage, as long as those risks fall within the policy's terms. This flexibility provides vital protection for businesses as they grow and evolve, ensuring they are not left vulnerable to unanticipated liabilities. While personal injury claims and property damage are components of what a CGL covers, the comprehensive nature of the liability protection is what makes the second option the most accurate representation of the policy's coverage scope.