Understanding Your Restaurant's Commercial General Liability Insurance Policy

For more than 30 years my father owned a small business. At least once a year he had to meet with his lawyer, his accountant and his insurance agent. While he knew that the advice these professionals were giving him was vitally important to his business, he never appreciated the services he received and dreaded the yearly meetings.

The lawyer was always too busy to give him enough time. The accountant was too persnickety and never understood how hard it was to profitably run a business. But he saved most of his hostility for the poor insurance man. "He is nothing more than a gloom-and-doom bookie. Taking my money all these years, I have never made a claim, and never had one made against me or the business, yet my premiums go up every year." This was followed by a string of curses and a statement as to how his profits were being eaten up by the yearly increase in insurance premiums.

My dad was a good businessman with an enormous attention to detail; but he never read or even really bothered to do more than glance at his insurance policy. When I asked him why he never read it, his response was pretty typical. "It's too boring to read, written in that legalese, with all those party-in-the-first parts, and therefores and herebys. It's also what I pay the agent for. He is supposed to make sure I have the right coverage and enough of it to protect us."

So, being the smart-mouth son with an expensive legal education I decided to sit down and read through his policy. You know what, my dad was right. The thing was too boring to read, the syntax was convoluted and confusing. Not only that, it must have been written by Lord Blackstone himself (William Blackstone was a famous 18th century English legal scholar). It had enough legalese to fill a courtroom. I made it through the first two pages and threw it back into the filing cabinet.

That futile exercise of some years ago got me thinking about how to best explain how your commercial general liability (CGL) insurance policy works. What is covered, what is not, and the problems you may face if you or a third party presents a claim.