CGL Insurance

  Commercial contracts have to be given due respect by both parties involved. But it is often seen that a third party gets involved in litigation and the end seller gets sued by a third party or end-user. Which is a costly affair. 

How this happens we do not know but we land in trouble for our product or service which we delivered long ago.

Take the case for example One of the exporters based in Delhi used to export shoe soles to a US-based client in early 2010. The business was growing all commercial terms were followed in spirit by both parties. The long business association gives the confidence to move forward.

Finished goods were made as per plan and sold to the end-user. 

One of the end-user used it in a fashion show, a small accident occurred in the how made her take a rest for a long time. Which caused her financial losses due to her nonworking condition of her. 

She sued the company which manufactured the shoe. While the case was in progress it was found that the sole got damaged when she was walking on-ramp.

The end conclusion was that the quality of the shoe sole was compromised by the manufacturer. But the manufacturer gave an argument that it was imported from India ( we are not revealing the name of the party here, as it will damage the reputation of the concerned business ) so all the liability is on the exporter for defective supply.

The final conclusion of the case was that the Indian Manufacturer had to give Rs,50 Cr. as compensation. Here one important thing was that the shoe was manufactured and sold more than two years back. Usually, the guarantee and warrantee of the product is not that much time, but somehow end-user convinced the court that the fault is in manufacturing not in her using pattern or aging of the shoe.

Here it comes CGL insurance, namely commercial general liability, as the name suggests it take the cover of liability arising due to this type of litigation or any other unforeseen incidence.

All major insurance company gives this type of policy. (Read policy wordings for more clarity)

The most important thing one has to check is the total coverage it provides and its conditions.

The date of aggregation is the most important factor in the policy.  Sum Assured of the above product is dependent on your annual turnover.