There’s a lot of satisfaction that comes from knowing your small business is insured. But it is important to comprehend your business’s risks and what the various forms of business insurance are intended to cover.
For instance, understanding what general insurance is not intended to cover is simply as important as understanding what it can cover. The ideal time and energy to find out what’s covered and what’s not is before you purchase a policy. As you consider your policy purchase, determine what is excluded. Once you receive your present liability policy paperwork, it could be tempting to file it away and move on to another challenge. But, before you let your guard down, take the time to be sure your policy covers everything you think it does.
Keep in mind the following exclusions found in almost all general liability insurance policies.
General Liability Excludes Professional Liability
General liability insurance is the most common type of business liability insurance. Basically, it is designed to protect your company in the event that someone alleges they were injured or their house was damaged due to your negligence.
A Business Owner’s Policy includes general liability insurance that covers bodily injury, property damage, personal injury and advertising injury. This often includes advertising copyright infringement; defamation of character, such as libel and slander; and invasion of privacy. A BOP also includes property insurance that covers both your own and others’ business property.
What’s missing? Claims related to professional negligence or failure to execute your professional duties.
Lawsuits linked to such claims have put many small companies out of business. Actually, for many professional services firms, the liability risk associated with professional errors & omissions and negligence could be far greater than the bodily injury and property damage risks covered by a general liability policy.
To protect your organization against such claims, you’ll have to purchase separate professional liability insurance, also called errors and omissions or E&O coverage.
Unfair or Discriminatory Employment Practices Are Not Covered
A typical commercial general liability insurance policy also doesn’t cover unfair or discriminatory employment practices, including hiring and termination-related claims. Also excluded are any claims linked to demotion, reassignment, employee evaluation, discipline, harassment, and other employment-related policies.
In short: if an employee alleges he / she was treated unfairly or that you acted illegally in your dealings using them, a general liability policy will most likely not respond. These exclusions apply not merely for employees currently on staff, but also to job applicants, contractors, and former employees who no more work for you.
If you’re worried about claims linked to employment-related practices, you may want to consider buying employment practices liability insurance (EPLI), which covers your legal liability for some claims related to wrongful termination, discrimination or sexual harassment.
If your business is like many small businesses, you occasionally rely on subcontractors to get the job done. If so, it is critical to be clear about how your general liability insurance applies to your subcontractors – or more importantly, how it could not.
With some insurance carriers, claims due to independent contractors focusing on your behalf aren’t covered by your general liability insurance policy. general liability insurance Alternatively, some general liability insurance policies are very broad and not only cover you, in case a contractor makes a mistake, but also cover the contractor directly. Obviously, is important to know in advance how you should expect your policy to execute.