There’s a lot of peace of mind 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 designed to cover.
For instance, understanding what general insurance is not intended to cover is simply as important as understanding what it does 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, know what is excluded. general liability insurance As soon as you receive your general liability policy paperwork, it can be tempting to file it away and get to the next challenge. But, before you let your guard down, take the time to be sure that your policy covers everything you think it does.
Keep in mind the following exclusions found in nearly all general liability insurance policies.
General Liability Excludes Professional Liability
General liability insurance is the most common type of business liability insurance. Basically, it really is designed to protect your organization in the event that someone alleges these were injured or their property was damaged due to your negligence.
A Business Owner’s Policy includes general liability insurance that covers bodily injury, property damage, accidental 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. In fact, for most 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 referred to as errors and omissions or E&O coverage.
Unfair or Discriminatory Employment Practices AREN’T Covered
An average commercial general liability insurance coverage 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, and other employment-related policies.
In short: if a worker alleges he or she was treated unfairly or that you acted illegally in your dealings using them, a general liability policy will usually not respond. These exclusions apply not merely for employees currently on staff, but additionally to job applicants, contractors, and former employees who no longer work for you.
If you’re concerned about claims related to employment-related practices, you might want to consider buying employment practices liability insurance (EPLI), which covers your legal liability for a few claims linked to wrongful termination, discrimination or sexual harassment.
If your business is like many smaller businesses, you occasionally depend on subcontractors to get the work done. If so, it’s important to be clear about how your general liability insurance applies to your subcontractors – or even more importantly, how it could not.
With some insurance carriers, claims due to independent contractors working on your behalf aren’t covered by your general liability insurance policy. Alternatively, some general liability insurance policies are very broad and not just cover you, if a contractor makes a mistake, but also cover the contractor directly. Obviously, is essential to know in advance the method that you should expect your policy to execute.