CGL Insurance Malaysia | Comprehensive General Liability

Your CAR policy covers damage to the works. Your IAR covers your factory property. Your workmen compensation covers your workers. But what covers the delivery driver injured by debris from your construction site? Or the neighbouring factory damaged by your chemical spill? Or the end-user harmed by your manufactured product?

That's CGL: Comprehensive General Liability. It covers third-party bodily injury, property damage, and products liability arising from your business operations. For contractors and manufacturers, it's the liability layer that completes your P&E insurance programme.

This guide covers:

• What CGL covers for industrial and construction operations
• CGL vs CAR Section II vs WC vs SPPI comparison
• When Malaysian contracts mandate CGL
• Premium factors for contractors and manufacturers
• Standard exclusions and what fills the gaps
• Industrial claim scenarios
• How CGL fits your P&E programme

What CGL Insurance Covers

CGL is an occurrence-based policy. It covers claims arising from incidents that occur during the policy period, regardless of when the claim is filed. This is different from claims-made policies like SPPI, where the claim must be made during the policy period.

CGL Coverage Components

CGL vs Other Liability Coverages

Contractors and manufacturers often have multiple liability coverages across different policies. Understanding what each one covers prevents both gaps and overlaps.

The key distinction: CAR Section II only covers third-party liability at the specific project site. Once your crew moves to a different site, finishes the project, or causes damage away from the insured project, CAR Section II doesn't apply. CGL covers your operations everywhere, all the time.

For contractors running multiple projects simultaneously, CGL provides the blanket liability coverage that project-specific CAR policies can't.

When Malaysian Contracts Require CGL

CGL is not legally mandatory in Malaysia. But contractual requirements effectively make it mandatory for most industrial and construction operations.

If you're a contractor bidding on government or large private projects, you'll need CGL before you can mobilise. Many contractors discover this requirement at the last minute during site mobilisation. Having an annual CGL policy already in place means you don't have to scramble for coverage when a new project starts.

CGL Coverage Limits for Industrial Operations

The right CGL limit depends on the nature of your operations and contractual requirements. Underinsuring can leave you personally exposed for amounts above your policy limit.

Get a CGL quotation tailored to your operations and contract requirements

Premium Factors for Industrial CGL

CGL premiums are non-tariff in Malaysia. Rates are negotiated between broker and underwriter based on your specific risk profile. A broker who understands industrial operations can present your risk in a way that earns better terms.

Indicative CGL Premium Ranges

CGL is one of the most affordable industrial insurance products relative to the protection it provides. For a medium-sized contractor, the premium is often less than one month's salary of a single worker, but it protects against multi-million ringgit claims.

Standard CGL Exclusions

CGL doesn't cover everything. Each exclusion exists because another policy handles that risk. Understanding the exclusions helps you identify gaps in your programme.

The care, custody, and control exclusion is the one that catches industrial operators most often. If you're a logistics company holding client goods in your warehouse, standard CGL won't cover damage to those goods. You need a specific extension or bailee's liability policy. If you're a contractor working on existing property (renovations, maintenance), the property you're working on may fall under this exclusion.

Common CGL Extensions for Industrial Operations

Industrial CGL Claim Scenarios

These scenarios show how CGL claims arise in real industrial and construction operations.

Scenario 1: Construction Site Debris Injury

A construction contractor is demolishing an old factory wall. Despite hoarding barriers, a piece of debris flies over the barrier and strikes a passing motorcyclist. The motorcyclist suffers a fractured arm and files a claim for medical expenses, lost income, and pain and suffering.

Note: This happened away from the project perimeter, so CAR Section II would not apply. Only the contractor's CGL policy covers this scenario.

Scenario 2: Chemical Spill Affecting Neighbouring Factory

A chemical plant in Pasir Gudang experiences a sudden pipe rupture. Process chemicals leak through the drain system and contaminate the neighbouring factory's water supply and finished goods. The neighbour files a claim for damaged stock and decontamination costs.

This is covered under CGL with the sudden and accidental pollution extension. The key word is "sudden": the pipe rupture was unexpected. If the contamination had been gradual (ongoing minor leaks over months), the pollution exclusion would apply.

Scenario 3: Manufactured Component Failure

A metal fabrication company in Klang supplies structural steel brackets to a construction project. Six months after installation, one batch of brackets shows weld defects under load testing. The main contractor must shut down an entire floor to remove and replace the defective brackets.

This is a products liability claim: the damage occurred after the product left the manufacturer's premises. Without the products and completed operations extension on their CGL, the fabricator would bear the full cost.

Scenario 4: Forklift Damage at Client's Warehouse

A logistics company's forklift operator accidentally reverses into a client's automated storage rack system while unloading at the client's warehouse. The impact damages the rack and destroys RM120,000 worth of stored inventory.

CGL in Your P&E Insurance Programme

CGL is the liability component that completes your property and engineering programme. Your property policies (IAR, Fire) protect your own assets. Your engineering policies (MB, BPV, EEI) protect your equipment. CGL protects you when your operations harm others.

Many contractors treat CGL as an afterthought or only buy it when a contract demands it. The smarter approach is maintaining an annual CGL policy that covers all your operations year-round. Annual policies are cheaper per day of coverage than project-specific policies, and they ensure you're never caught without liability protection between projects.

Talk to Foundation about structuring CGL within your P&E programme

FAQ

Is CGL insurance mandatory in Malaysia?

No, CGL is not legally required. But it's contractually required for most construction projects, government tenders, PETRONAS vendor registration, and many manufacturing supply chain agreements. If you bid on commercial or government projects, you'll need CGL as a condition of the contract.

What's the difference between CGL and CAR Section II?

CAR Section II covers third-party liability only at the specific insured project site and only during the project period. CGL covers your operations everywhere, across all projects and locations, for the full policy year. If you cause damage away from a project site (at your yard, during transit, at a client's premises), only CGL responds.

Does CGL cover my employees if they get injured?

No. Employee injuries are explicitly excluded from CGL. Your workers are covered under workmen compensation insurance (for foreign workers and SOCSO-exempt employees) and SOCSO (for Malaysian employees). Employers' liability insurance covers common law claims from employees beyond WC/SOCSO.

What's the typical CGL premium for a contractor?

Premiums typically range from 0.05% to 0.40% of annual turnover, depending on risk classification, claims history, and coverage limits. A medium-sized contractor with RM20M turnover and RM3M CGL limit might pay RM8,000-15,000 annually. Chemical and O&G contractors pay higher rates due to elevated risk profiles.

Can I add products liability to my CGL?

Yes. Products and completed operations coverage is a standard extension to CGL policies. For manufacturers, it's not optional: if your products enter the supply chain, you need this extension. It covers injury or damage caused by your products after they leave your factory gate.

What is the care, custody, and control exclusion?

This exclusion means CGL does not cover damage to property that is in your possession, under your control, or that you've been entrusted with. For example, if you're a contractor working on a client's building and you damage the building, the CCC exclusion may apply. This is one of the most commonly triggered exclusions in industrial CGL claims. Ask your broker about contractual liability extensions that may address this gap.

Do I need separate CGL for each project?

No. An annual CGL policy covers all your operations across all projects and locations for the policy year. This is more cost-effective and administratively simpler than buying project-specific CGL. The only exception is when a specific project requires CGL limits higher than your annual policy, in which case you may need a project-specific excess layer.

What happens if my CGL limit is too low?

If a claim exceeds your policy limit, you're personally liable for the excess. For example, if you have RM2M CGL and face a RM3M claim, your insurer pays RM2M and you pay RM1M from your own resources. Malaysian courts have awarded damages exceeding RM5M in serious industrial injury cases. Setting adequate limits is one of the most important decisions in your insurance programme.

Does CGL cover my subcontractors?

Your CGL does not automatically cover your subcontractors. Each subcontractor should carry their own CGL. You can, however, be named as an additional insured on their CGL policy (and vice versa). Main contractor agreements typically require subcontractors to maintain their own CGL with minimum limits.

How does CGL interact with OSHA 1994 penalties?

CGL does not cover OSHA 1994 fines and penalties. Regulatory penalties (up to RM500,000 under the 2022 Amendment) are the employer's direct liability. CGL covers civil claims from injured third parties, not government enforcement actions. Strong safety compliance reduces both your OSHA exposure and your CGL premium.

Foundation Conclusion

Your CAR policy protects the works. Your IAR protects your factory. Your WC protects your workers. But when your operations cause injury or damage to someone else's property or person, CGL is what stands between you and a direct financial hit. For contractors and manufacturers, it's the liability layer that completes the P&E programme.

CGL is affordable relative to the exposure it covers. The cost of not having it is one bad incident away from becoming clear.

Get a CGL quotation structured for your industrial operations

Disclaimer: This article provides general guidance on insurance coverage available in the Malaysian market. Policy terms, conditions, and availability vary by insurer. Always review your specific policy wording or consult a qualified insurance professional before making coverage decisions.