1. Forms
2. CG
3. CG-APPL

Commercial General Liability Application (CG APPL)

The Commercial General Liability Application (CG APPL) is a foundational document used by insurance companies to gather the necessary information from a business seeking Commercial General Liability (CGL) insurance. Its primary purpose is to provide underwriters with a comprehensive overview of the applicant's business operations, risk exposures, and coverage needs to determine policy terms and pricing. Accurate completion of this form is crucial for obtaining appropriate coverage.

Classes of Business It Applies To

The CG APPL is utilized across a wide spectrum of industries due to the near-universal need for general liability coverage. Some key examples include:

• Construction and Contracting: These businesses face risks from on-site injuries, property damage during projects, and completed operations liability. For instance, a plumbing contractor might damage a client's property while installing pipes, or a completed roofing job might leak and cause water damage.
• Retail and Hospitality: Businesses like stores, restaurants, and hotels have significant public interaction, leading to premises liability risks such as slip and fall incidents. For example, a customer might slip on a wet floor in a grocery store.
• Manufacturing: Manufacturers can be liable for injuries or damages caused by their products (product liability). For example, a toy manufacturer might face claims if a toy part poses a choking hazard.
• Professional Services: While professional liability (Errors & Omissions) is a separate coverage, firms like consultants, real estate agents, and accountants often still need CGL for general business risks like client injuries on their premises.
• Real Estate Owners and Property Managers: They require CGL to cover risks associated with their properties, such as tenant or visitor injuries.
• Small to Medium-Sized Businesses (SMBs): Virtually any SMB that interacts with the public, has a physical location accessible to clients, or handles client property needs CGL coverage.

Special Considerations

Several factors make the CG APPL a critical component of the underwriting process:

• Contractual Requirements: Many contracts, such as leases with landlords or agreements with clients, mandate that a business carry CGL insurance and may require naming the other party as an "additional insured." For example, a property management company might require a contractor to add them as an additional insured before starting a renovation project.
• Licensing Requirements: Some states or professional licensing bodies require businesses in certain industries (e.g., construction, real estate, dentists) to have CGL coverage.
• Accuracy and Disclosure: Applicants must provide truthful and complete information. Material misrepresentations can lead to claim denials or policy rescission. For instance, failing to disclose high-risk operations like blasting could jeopardize coverage.
• Exclusions: CGL policies have standard exclusions, such as for intentional acts, pollution (though some endorsements may provide limited coverage), employee injuries (covered by workers' compensation), and professional errors (covered by E&O insurance). It's important for applicants to understand these limitations.
• Policy Structure: A CGL policy typically includes coverage for Bodily Injury and Property Damage (Coverage A), Personal and Advertising Injury (Coverage B), and Medical Payments (Coverage C). The application helps determine the appropriate limits for each.

Key Information for Agents and Underwriters

The CG APPL provides critical data points for agents to advise clients and for underwriters to assess risk and determine premiums. Key areas include:

• Nature of Business Operations: A detailed description of all business activities is paramount. This helps identify specific hazards associated with the industry and the particular business. For example, a restaurant's operations differ significantly from a software consultant's.
• Premises and Location: The size, condition, and location of the business premises influence risk. Larger premises or those in high-crime or high-traffic areas may result in higher premiums.
• Revenue and Number of Employees: Higher revenue and a larger number of employees can indicate increased exposure and potentially higher premiums.
• Claims History: Past claims are a significant indicator of future risk. A history of frequent or severe losses will likely lead to higher premiums or difficulty securing coverage.
• Risk Management Practices: Businesses with proactive risk management programs (e.g., safety protocols, employee training) may be viewed more favorably by underwriters.
• Coverage Limits and Deductibles: The application helps determine appropriate coverage limits based on the business's exposures and any contractual requirements. Higher limits will increase the premium, while higher deductibles can lower it.
• Subcontractor Exposure: If the applicant uses subcontractors, details about their insurance and the nature of their work are important for assessing contingent liability.
• Product and Completed Operations Exposure: For businesses that manufacture, sell, or install products, or complete projects, this section is critical for evaluating potential long-term liabilities.

Underwriters use the information gathered on the CG APPL, sometimes supplemented by inspections or third-party data, to classify the business, assess its unique risks, and ultimately decide on the acceptability of the risk and the appropriate premium. A well-completed and accurate application facilitates a smoother underwriting process and helps ensure the business obtains the right coverage for its needs.