Your Business Shield: Commercial General Liability Insurance in Texas

When people start a small business in Texas, they often think, “I’m small. I don’t need expensive insurance.” Or maybe they think, “If someone gets hurt in my rented store, the building owner’s insurance will pay.”

These ideas can lead to big problems.

Key Takeaways: Commercial General Liability (CGL) Insurance

This document summarizes the essential protections and limitations of Commercial General Liability (CGL) insurance for small businesses.

I. The Core Purpose: Protecting Your Financial Shield

• Primary Shield: CGL is the most important, basic insurance policy. It acts as a financial shield, protecting your business savings from expensive lawsuits filed by outside people (customers, vendors, visitors).
• Third-Party Claims: CGL only covers claims brought by third parties, meaning anyone who is not your employee or your own business.

II. What CGL Insurance Covers (The Three Parts)

1. Bodily Injury & Property Damage: This covers physical accidents that happen because of your business operations or at your location.
   • Example: A customer slips on a wet floor and breaks an arm (Bodily Injury).
   • Example: You accidentally knock over and break a client’s expensive equipment (Property Damage).

1. Personal and Advertising Injury (Reputation): This covers non-physical harm that damages someone’s reputation or intellectual property.

1. • Examples: Lawsuits claiming you committed libel or slander against a competitor.
   • Examples: Accidental use of someone else’s copyrighted photo or logo in your advertising.

1. Medical Payments: This covers small medical bills quickly, regardless of who was at fault, to prevent a minor injury from turning into a large, expensive lawsuit.

III. What CGL Insurance Does NOT Cover (The Gaps)

It is crucial to know what CGL excludes, as you need separate policies for these risks:

IV. Business Necessity and Requirement

• Required for Growth: You must have CGL to rent a commercial space (landlords require it) and to win contracts with larger clients.
• COI: A Certificate of Insurance (COI) is the document used to prove you have active CGL coverage.
• Coverage Limits: You should aim for at least $1 Million per accident (per occurrence) to meet most client and landlord requirements and ensure adequate safety.

Running a business means you are responsible for many things. Every day, your business is around other people: customers who visit, people who deliver supplies, and other companies you hire. If any of these people get hurt, or if their belongings are broken because of your business, they could sue you.

Commercial General Liability (CGL) insurance is the first and most important type of insurance for almost every small business. It acts like a strong financial shield. This insurance protects your business from having to pay huge amounts of money if an outside person claims you caused them injury, broke their property, or harmed their reputation.

The Main Idea: You must understand the three main parts of CGL insurance and choose the right coverage amounts. Doing this helps your Texas business get important contracts, look professional, and keep your money safe from expensive lawsuits.

Part 1: Accidents and Broken Things (Bodily Injury and Property Damage)

The CGL policy is split into three main parts, or “coverages.” This first part is the one people think about the most, as it deals directly with physical accidents that happen because of your business operations.

A. If Someone Gets Hurt (Bodily Injury)

This part pays if an outside person (not your employee) gets hurt, sick, or dies because of something your business did or because of something at your business location.

• What it Covers: Medical bills, money for missed work, and the cost of lawyers if the person sues you.
• Simple Example: Imagine you own a small shop that sells fancy popcorn. One day, a customer slips on a wet spot near the counter that wasn’t cleaned up yet. They fall and break their wrist. They sue your business to pay for the doctor visits and the time they couldn’t work. Your CGL insurance steps in. It hires the lawyers and pays the costs if you lose the case. This keeps your business’s savings safe.

B. If You Break Someone’s Property (Property Damage)

This part pays if your business accidentally damages something that belongs to an outside person.

• What it Covers: The cost to repair or replace the outside person’s property.
• Simple Example: Let’s say you own a computer repair service and you go to a client’s office. While you are setting up a new computer, you accidentally knock over an expensive lamp on their desk, and it shatters. Your CGL insurance can pay the client the money needed to buy a new lamp. Without CGL, your business would have to pay that cost straight out of its own money.

Part 2: Damage to Reputation and Ideas (Personal and Advertising Injury)

While Part 1 covers physical harm and broken things, this second part protects you from non-physical harms that damage someone’s name, reputation, or business.

The second part of CGL insurance is often called Coverage B. It deals with non-physical harm. This is very important in today’s world where everyone uses the internet and social media. This part protects you if you accidentally damage someone’s reputation or steal their idea.

• Libel and Slander (False Talk): This protects you if someone claims your business said or wrote something false about them or another business, which hurt their reputation or ability to make money.
  • Example: If you post something on social media saying a competitor’s product is terrible, and the competitor sues you, claiming the statement was false and hurt their sales, your CGL policy covers your defense.
• Stealing Ideas (Copyright): This applies if you accidentally use a picture, a logo, or a catchy phrase in your own ads that someone else created and owns.
  • Example: You grab a cool photo from the internet for your website banner without checking if it’s free to use. The photographer who owns the image sues you for using their work without paying. This part of your CGL policy helps pay for the legal fight and any settlement.

Part 3: Covering Small Hurts (Medical Payments)

This third part, Coverage C, is a smart, preventative part of the policy. It helps stop small problems from quickly becoming huge lawsuits.

• It Pays Quickly: It pays small, fair medical bills for someone hurt at your business, no matter who was technically at fault for the accident. It pays right away without having to prove carelessness.
• Why It Helps: If a customer gets a small cut or twists an ankle, the business can quickly offer to pay the emergency room bill. This stops the person from getting angry, hiring a lawyer, and filing a large lawsuit against you. It is a way to handle minor issues fast before they turn into major legal fights in court.

Why Every Texas Business Needs This Shield

Even though the Texas government doesn’t force most private businesses to buy CGL insurance, the real world of business makes it a requirement. If you want to grow your company and get better opportunities, you need CGL.

A. Getting Contracts and Leases

Almost every big business partner, landlord, and client will ask you to prove you have CGL insurance before they work with you.

• Renting a Space: If you want to rent a store, office, or workshop, the landlord will always ask for CGL. They want to know your insurance will pay if you break the building or if your customers cause problems.
• Getting Big Jobs: If you are a plumber, a graphic designer, or a contractor, the companies that hire you will require a document called a Certificate of Insurance (COI). This paper proves you have CGL. If you don’t have it, they will hire the next company that does.

Without CGL, your business will be stuck. It won’t be able to rent commercial spaces or get the best, biggest contracts.

B. Sharing Your Shield (Additional Insured)

When you sign a large contract, the client will often ask you to name them as an “Additional Insured” (AI) on your CGL policy.

Think of it like sharing your insurance shield.

• What This Means: If your business is working for Client A, and an accident happens that is technically your fault, Client A wants to be protected too. Adding them as an AI means that if they get dragged into a lawsuit because of your work, your CGL policy will help pay their legal costs first. This is a very common requirement in business contracts and shows that your business is serious and prepared.

What CGL Insurance Does NOT Cover

CGL insurance is a great shield, but it has limits. Many business owners make a mistake by thinking CGL covers everything. It does not. CGL is meant only for those outside accidents and reputation damage. You need separate policies for other types of risk:

• Your Own Mistakes or Bad Advice (Professional Liability): If your business is paid for its expertise—like an accountant, a lawyer, a web designer, or a consultant—you could get sued for doing a bad job, making a mistake, or giving wrong advice that costs the client money.
  • CGL does NOT cover this. You need a separate policy called Errors & Omissions (E&O) or Professional Liability insurance.
• Injuries to Your Employees (Workers’ Compensation): CGL only covers outside people (third parties). If one of your own employees gets hurt while working, that is not covered.
  • CGL does NOT cover this. You need Workers’ Compensation insurance. Even though Texas often makes this optional for private companies, almost all smart businesses buy it to protect themselves if a worker is injured.
• Damage to Your Own Stuff (Commercial Property): CGL pays for damage to other people’s property. It does not pay for damage to your own things.
  • CGL does NOT cover this. If your store burns down, or if someone steals your expensive computers or inventory, you need a separate Commercial Property Insurance policy to replace them.
• Car Accidents (Commercial Auto): If you or your employees cause an accident while driving a company car on the street, that accident is handled by a different policy.
  • CGL does NOT cover this. You need Commercial Auto Insurance.

Frequently Asked Questions (FAQs) About CGL Insurance

1. What is the difference between Commercial General Liability (CGL) and Workers’ Compensation?

CGL insurance is a shield for your business when an outside person (like a customer, delivery person, or client) gets hurt or has their property broken because of your business. Workers’ Compensation is a separate policy that pays for medical bills and lost wages if your own employee gets injured while they are working for you. CGL never covers your employees.

2. Does my landlord’s insurance cover accidents that happen in my leased space?

No. This is a common mistake! While the landlord’s insurance covers the structure of the building itself, your business is responsible for what happens inside your rented space or for accidents caused by your business operations. If a customer slips and falls in your shop, your CGL policy is what protects you, not the landlord’s policy.

3. What does “Personal and Advertising Injury” really mean?

This coverage protects you from lawsuits over non-physical harm. The most common examples are:

• Libel/Slander: Saying or writing something false about another person or business that hurts their reputation.
• Copyright Infringement: Accidentally using someone else’s copyrighted photo, logo, or advertising slogan in your own ads or on your website.

4. What is a “Certificate of Insurance (COI)” and why do I need it?

A Certificate of Insurance (COI) is a simple piece of paper from your insurance company. It proves that you have active CGL coverage and shows the limits (how much the insurance will pay). You need a COI because every landlord, big client, or business partner will ask for it to prove you are protected before they will work with you.

5. If I give bad advice to a client and they lose money, will CGL cover me?

No, CGL insurance will not cover this. CGL is only for physical accidents, property damage, and reputation harm. If you are paid for your expertise (like a consultant, accountant, or web designer) and you make a mistake or give bad advice that causes a client to lose money, you need a separate policy called Errors & Omissions (E&O) or Professional Liability insurance.

Conclusion: Securing Your Future

Commercial General Liability insurance is not an optional extra; it is the most basic protection for your company’s future. It acts like a strong wall, protecting your business savings from the massive costs of lawsuits, legal fees, and accident settlements. It also ensures you can take part in the business world in Texas by getting the leases and contracts you need.

For small business owners, simply having the policy is only half the job. You also need to choose the right amount of coverage. We suggest starting with at least $1 Million per accident (called “per occurrence”). This amount is often required by landlords and clients and gives you a good level of financial safety against potential claims.

It’s time to act. Don’t wait until a small accident turns into a huge, expensive court case that can shut down your dreams. You need a trusted insurance expert who understands the contracts, the liability rules, and the specific dangers that businesses face in Texas.

Call GrayStone Insurance Group today. We will help you understand your risks and get the simple, right-sized CGL policy that meets every requirement. With the right coverage in place, you can stop worrying about accidents and start spending all your time making your business grow.