As a small business owner or contractor, you’ve worked hard to build your company and make it the success it is. At Preferred Insurance, we want to help protect your investment and livelihood. Whether you are a sole proprietor with no employees, have full- or part-time employees or are a contractor with subs, it is important that you have the coverage you need to protect your business while also having the ability to obtain additional contracts and clients to expand your operation. Commercial General Liability insurance (CGL), also known as Business Liability or just Liability insurance, will help you do that.

Your Coverage Under a Commercial General Liability Policy

Although all business owners know they need Liability insurance, what exactly do you get when you purchase a CGL policy? Following is a brief primer:

  • Property Damage – Coverage for damage to property for which you are legally liable (including rented property).
  • Bodily Injury – Kicks in in the event of injuries to persons for which you are legally liable.
  • Medical Payments – Pays for a bodily injury that occurs during the course of your business operations.
  • Defense Costs – Covers legal fees related to lawsuits against your company regardless of fault.
  • Personal & Advertising Injury – Pays for claims of slander that are not part of your professional services.
  • Products/Completed Operations Coverage  – Pays for bodily injury and property damage that occurs away from your business premises and is caused by your products or completed work.

Commercial General Liability insurance can be purchased as part of a package policy, such as a BOP or CPP. It is also available to many contractors as standalone coverage. The key is to understand your specific needs so that the coverage you secure fits your unique risk profile. For example, a contractor will want to ensure that a Liability policy is endorsed with the right type of “additional insureds” coverage. In addition, you will need to look closely to see whether your Liability policy excludes faulty workmanship and how this exposure can be addressed. This is why working with a qualified Texas insurance professional such as Preferred is best. We will make sure you are getting the right coverage.

What Is a Premium Audit?

Typically Commercial General Liability policies are auditable and contain a provision commonly called a “premium audit.” The premium paid at the inception of the policy is a deposit (estimated) premium. Auditable policies usually use estimated payroll, sales, or units sold as the premium base to calculate the deposit (estimated) premium.

The insurance company is entitled to examine your books and records to determine whether the actual payroll, sales, or units sold are greater or less than what was estimated. This is usually done after the expiration of the policy, but may also be done during the policy period. If the actual payroll, sales, or units sold is greater than was estimated, you may owe additional premium. If the actual payroll, sales or units sold is less than what was estimated, you may be due a return premium. Therefore, it is important to provide an estimate of the payroll, sales, or units to be sold that is as accurate as possible to avoid having to pay an additional premium. Our professional staff will help you with this.

Beyond General Liability

There are additional coverages that you may require, too. This includes a Commercial Umbrella policy, which extends the liability limits in your basic policies, such as the CGL and your Commercial Auto insurance. If there is a catastrophic loss, such as a devastating injury or death on your premises or involving a company vehicle, you want to ensure that you have enough Liability insurance to cover the loss.  Depending on the type of business you operate, you may need Errors & Omissions (E&O) insurance. This is particularly important for professionals who can be sued for financial losses due to the work they perform, such as architects, engineers, contractors responsible for design/build, accountants, real estate agents, and many others. Employment-related lawsuits involving allegations of discrimination, harassment and other issues won’t be covered under a CGL policy unless there is Employment Practices Liability Insurance (EPLI). Lawsuits against directors and officers also need special insurance protection. We can discuss these and other coverages with you.

Make Preferred Your Insurance Choice

The hallmarks of our success are our integrity, ethics, reliability and the value we place on our clients. We invite to learn more about us, and make Preferred your agency of choice. Give us a call at 888-943-5144 or email us at