There’s a lot of peace of mind that comes from knowing your small business is insured. But it is essential to understand your business’s risks and what the various types of business insurance are intended to cover.
For instance, understanding what general insurance isn’t intended to cover is just as important as understanding what it can cover. The ideal time 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 Public and Products Liability insurance receive your general 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 following 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 really is designed to protect your organization 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 includes property insurance that covers both your personal and others’ business property.
What’s missing? Claims related to professional negligence or failure to perform your professional duties.
Lawsuits linked 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 could 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 would 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, 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 also to job applicants, contractors, and former employees who no more work for you.
If you’re worried about claims related to employment-related practices, you may 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 similar to many smaller businesses, you occasionally rely on subcontractors to get the work done. If so, it’s important to be clear about how your present liability insurance pertains to your subcontractors – or more importantly, how it might not.
With some insurance carriers, claims caused by independent contractors focusing on your behalf aren’t included in 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 additionally cover the contractor directly. Obviously, is important to know in advance the method that you should expect your policy to execute.