There’s a lot of peace of mind that comes from knowing your small business is insured. But it is important to understand your business’s risks and what the many forms of business insurance are intended to cover.
For example, understanding what general insurance isn’t 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 get a policy. As you take into account your policy purchase, determine what is excluded. Once you receive your general liability policy paperwork, it can be tempting to file it away and get to another challenge. But, before you let your guard down, take a little time to be sure your policy covers all you think it does.
Keep in mind the next exclusions found in almost all general liability insurance policies.
General Liability Excludes Professional Liability
General liability insurance may be 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 property was damaged because of 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 contains property insurance that covers both your personal and others’ business property.
What’s missing? Claims linked to professional negligence or failure to perform your professional duties.
Lawsuits related to such claims have put many small companies out of business. Actually, for many professional services firms, the liability risk connected with professional errors & omissions and negligence can be far greater compared to the bodily injury and property damage risks included in 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 AREN’T Covered
An average 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 related to demotion, reassignment, employee evaluation, discipline, harassment, along with other employment-related policies.
In short: if a worker alleges he or she was treated unfairly or that you acted illegally in your dealings with them, a general liability policy will usually not respond. These exclusions apply not only for employees currently on staff, but additionally to job applicants, contractors, and former employees who no more work for you.
If you’re concerned about claims related to employment-related practices, you might like to consider buying employment practices liability insurance (EPLI), which covers your legal liability for a few claims related to wrongful termination, discrimination or sexual harassment.
If your business is like many smaller businesses, you occasionally depend on subcontractors to get the job done. If so, it’s important to be clear about how your present liability insurance applies to your subcontractors – or more importantly, how it could not.
With some insurance carriers, claims caused by independent contractors focusing on your behalf aren’t included in your general liability insurance policy. However, some general liability insurance policies are very broad and not just cover you, in case a contractor makes a mistake, but additionally cover the contractor directly. Obviously, is important to know in advance how you should expect your policy to execute. general liability insurance