There’s a lot of reassurance 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 instance, 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 consider your policy purchase, determine what is excluded. As soon as you receive your present liability policy paperwork, it may be tempting to file it away and move on to another challenge. But, before you let your guard down, take a little time to be sure that 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 is the most common kind of business liability insurance. Basically, it is designed to protect your organization when someone alleges they were injured or their house was damaged as a result of 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 for example 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 execute your professional duties.
Lawsuits related to such claims have put many small companies out of business. Actually, for most professional services firms, the liability risk connected with professional errors & omissions and negligence can be far greater than the bodily injury and property damage risks included in a general liability policy.
To protect your business against such claims, you would need 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 linked to demotion, reassignment, employee evaluation, discipline, harassment, along with other employment-related policies.
In short: if an employee alleges she or he was treated unfairly or that you acted illegally in your dealings with them, a general liability policy will most likely not respond. general liability insurance These exclusions apply not merely 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 linked to employment-related practices, you should 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 depend on subcontractors to get the job done. If so, it is important to be clear about how your general liability insurance pertains 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 included in your general liability insurance coverage. However, some general liability plans are very broad and not only cover you, if a contractor makes a mistake, but additionally cover the contractor directly. Obviously, is important to know in advance the method that you should expect your policy to execute.