When it comes to protecting businesses from potential liabilities, commercial general liability (CGL) insurance is one of the most crucial coverage options. ACORD 126 – Commercial General Liability Section, plays a key role in streamlining the application process for CGL policies. This standardized form ensures that businesses have the proper coverage limits and provides insurers with essential details to evaluate the risk exposure accurately.
Understanding how ACORD 126 works can help business owners, insurance agents, and underwriters navigate the process more effectively, ensuring businesses are properly protected from the unexpected.
What Is ACORD 126?
ACORD 126 is a standardized application form used for requesting commercial general liability (CGL) insurance coverage. The form is designed to collect detailed information about a business's operations, existing policies, and specific liability risks. It helps insurers assess risk factors, which is crucial in determining appropriate coverage limits and premiums. The General Liability Insurance market is projected to reach a size of $338.82 billion in 2025, reflecting the growing need for businesses to secure comprehensive coverage
The ACORD 126 form is often used in conjunction with other ACORD forms, such as ACORD 125 (Commercial Insurance Application), to gather comprehensive details required for underwriting. By capturing key information about the business’s activities, operations, and past claims, the form allows insurers to make informed decisions about the extent of coverage needed.
Key Information on ACORD 126
ACORD 126 gathers a variety of information necessary for underwriters to evaluate and issue commercial general liability policies. Below are the key sections included in the form:
1. Applicant Information
This section gathers general details about the business or individual applying for CGL coverage. It includes the name, contact information, and legal structure of the business. This information helps the insurer identify the applicant and tailor the coverage to the business’s specific needs.
2. Business Operations and Risk Exposure
This section outlines the type of business activities and operations the company is involved in. Whether the business operates in retail, manufacturing, or services, this part helps the insurer assess the overall risk exposure based on industry-specific risks. The more accurate this section is, the better the insurer can determine the coverage limits required.
3. Coverage Limits Requested
Applicants will specify the amount of coverage they need under the CGL policy. This section covers various types of coverage, including bodily injury, property damage, personal injury, and advertising injury. The requested limits will often depend on the size and type of the business, as well as its level of risk.
4. Existing Insurance Policies
This section requires businesses to list any existing insurance policies, including previous or current CGL policies. It helps insurers assess any gaps in coverage and whether the business needs additional coverage or adjustments to its current policy.
5. Claims History
A critical section of ACORD 126 is the claims history section, where businesses are asked to disclose any past claims or losses related to liability. Full disclosure of previous incidents ensures that insurers can accurately assess risk and set appropriate policy limits. It also helps identify whether the business is eligible for any discounts or adjustments.
When Is ACORD 126 Used?
Insurance agents and businesses use ACORD 126 in the following scenarios:
New CGL policy applications: When a business is seeking a new commercial general liability policy, ACORD 126 is used to provide insurers with essential information.
Policy renewals: Businesses may need to complete ACORD 126 during the renewal process to ensure their coverage limits remain appropriate for their risk exposure.
Adjustments in coverage: If a business needs to adjust its coverage due to changes in operations, risks, or assets, ACORD 126 helps outline the new terms and ensure appropriate coverage.
Claims reporting: In some cases, ACORD 126 is used to disclose incidents or claims that affect a business’s liability exposure.
By using ACORD 126, insurance professionals can streamline the underwriting process and ensure businesses are adequately covered against potential liabilities.
Considerations for ACORD 126
Before filling out ACORD 126, there are a few factors businesses should consider:
Accuracy of business operations: Ensure the description of business activities is as accurate and detailed as possible. Inaccurate descriptions could lead to incorrect coverage, increasing risk exposure.
Adequate coverage limits: Evaluate the business’s level of risk and determine whether the requested CGL limits provide sufficient protection. Consulting with an experienced insurance agent can help ensure the right level of coverage.
Claims history transparency: Be upfront and accurate about past claims. Transparency helps insurers properly assess risk and avoids complications when the business needs to file future claims.
By keeping these factors in mind, businesses can improve their chances of securing the appropriate level of liability protection.
Conclusion
ACORD 126 is a vital form for businesses seeking commercial general liability insurance, providing insurers with the essential details required to assess risk and determine appropriate coverage limits. By accurately completing this form, businesses can ensure they are adequately protected from potential liabilities, whether applying for a new policy, renewing an existing one, or adjusting coverage.
For insurance agencies aiming to streamline operations, CLICKVISION's insurance back office outsourcing services provide a comprehensive solution. By handling tasks like form completion, claims management, and policy processing, agencies can reduce operational costs, improve accuracy, and focus on core business activities and client relationships.
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