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CGL insurance

Commercial general liability (CGL) insurance is a type of insurance policy designed to provide broad coverage to businesses for bodily injury claims, property damage, and advertising and personal injury liability. CGL insurance is considered comprehensive business insurance, but it does not cover all of the risks a business may face. When a claim is covered by the insurance policy, the insurance company generally has two duties to the insured (business): the duty to defend the insured by hiring a lawyer to represent the business, and the duty to indemnify the insured, by paying to settle the claim or paying any judgment from a court or arbitrator.

In Texas, Commercial General Liability (CGL) insurance is a standard form of insurance that provides businesses with coverage for various types of risks, including bodily injury, property damage, and liability arising from advertising and personal injury. While CGL insurance offers broad protection, it does not cover all potential business risks, such as professional errors, employment disputes, or intentional acts. Under Texas law, when a claim falls within the scope of the CGL policy, the insurer has two primary obligations: the duty to defend and the duty to indemnify. The duty to defend requires the insurer to hire an attorney to represent the business in legal proceedings related to the claim. The duty to indemnify involves the insurer paying to settle the claim or covering any court or arbitration judgment against the insured business. It's important for businesses to understand the specific terms and exclusions of their CGL policies and to consult with an attorney for guidance on coverage and claims handling.


Texas Statutes & Rules

Federal Statutes & Rules

McCarran-Ferguson Act (15 U.S.C. §§ 1011-1015)
This federal statute is relevant because it provides that state law shall govern the regulation of insurance, and federal law should not preempt state law unless specifically related to insurance. This affects how CGL insurance policies are regulated and the extent to which federal statutes may apply.

The McCarran-Ferguson Act, passed in 1945, gives states the authority to regulate the business of insurance without interference from federal regulation, unless federal law specifically provides otherwise. This means that while CGL insurance is a product offered across state lines, the specifics of the coverage, the regulation of the insurers, and the interpretation of the policies are primarily matters of state law. The Act also provides that no act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any state for the purpose of regulating the business of insurance, unless the federal act specifically relates to the business of insurance.

Federal Insurance Office Act of 2010 (Title V, Subtitle A of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 31 U.S.C. §§ 313 and 314)
This statute is relevant as it established the Federal Insurance Office (FIO) which monitors the insurance industry, including CGL insurance, and addresses gaps in the state-based regulatory system.

The Federal Insurance Office Act of 2010 established the Federal Insurance Office within the Department of the Treasury. The FIO is authorized to monitor all aspects of the insurance industry, including the extent to which traditionally underserved communities and consumers, minorities, and low- and moderate-income persons have access to affordable insurance products regarding all lines of insurance, except health insurance. The FIO's role includes monitoring the availability and affordability of insurance products such as CGL insurance. The FIO has the authority to gather information, issue reports, and advise the Secretary of the Treasury on domestic and international insurance policy issues. However, the FIO does not have regulatory authority over the insurance industry; that remains with the states.

Terrorism Risk Insurance Act (TRIA) of 2002 (15 U.S.C. §§ 6701 note)
This statute is relevant to CGL insurance as it provides a federal backstop for insurance claims related to acts of terrorism, which can affect the coverage and claims related to CGL policies.

The Terrorism Risk Insurance Act of 2002 was enacted in response to the inability of businesses to secure terrorism risk insurance following the September 11, 2001 attacks. TRIA requires insurers to offer terrorism risk insurance and provides a federal backstop for such insurance to ensure its availability. The Act creates a shared public and private compensation system for insured losses resulting from acts of terrorism. The federal government covers a portion of the losses that exceed certain thresholds, subject to a cap. This can impact CGL policies that may include coverage for acts of terrorism, and it affects the risk assessment and underwriting practices of insurers offering CGL insurance.

Gramm-Leach-Bliley Act (GLBA) (15 U.S.C. §§ 6801-6827)
This statute is relevant to CGL insurance as it governs the collection, disclosure, and protection of consumers' nonpublic personal information by financial institutions, which can include insurers.

The Gramm-Leach-Bliley Act, also known as the Financial Services Modernization Act of 1999, includes provisions to protect consumers' personal financial information held by financial institutions, which may include insurance companies that provide CGL insurance. The GLBA requires financial institutions to explain their information-sharing practices to their customers and to safeguard sensitive data. The Act also allows for the sharing of information between affiliates and third parties, subject to certain conditions and exceptions. Insurers providing CGL insurance must comply with the GLBA's privacy provisions and ensure that any sharing of nonpublic personal information is done in accordance with the law.