What Are the Exclusions on a General Liability Insurance Policy?
Regardless of what type of business you’re in, having a general liability insurance plan in place is your first line of defense against many risks associated with owning a business. Even if you’re self-employed, this type of coverage simply makes sense. However, it does have certain limitations. It’s important to be educated about exactly what your policy includes and does not include.
The Protection Afforded by the Right Insurance Policy
A general commercial liability policy will cover most costs associated with a lawsuit that arises from bodily injury or damage to property of others. It will cover the medical expenses of anyone injured on your business’s property, or injured as a result of your business operations, regardless of fault. This type of insurance coverage also protects you from advertising injury claims, such as libel, defamation, privacy violation, or piracy that resulted from advertising activities.
Why Do You Need General Liability Insurance?
This type of insurance is crucial if you have an office or storefront where clients, patients vendors and others can visit. Yes, even if you just own a very small business or are self-employed, having general liability coverage is a critical part of your risk-management toolkit. Even a professional that works remotely can benefit from this type of policy. It follows you where you work, even if that’s just visiting with clients in their home or a neutral location. Without it, a third-party lawsuit for physical or financial damages could literally wipe out your business. Being insured for general liability often isn’t a choice — many clients and lenders require it.
Exclusions That Are Not Covered
There are several situations that will not be covered by any insurance that falls under general liability. This isn’t to say that they can’t be covered under other plans, but you need to be aware of the specific limitations associated with this type of insurance. You will not be protected against any of the following:
- Knowingly wrongful or criminal acts
- Lawsuits related to professional performance
- Employee injuries
- Legal action related to human resources practices
- Business property damage (this won’t come standard, but can usually be added to a general liability policy)
- Accidents involving employee or company-owned vehicles
- Judgements and costs greater than your policy limits
- Acts committed outside of the covered the policy period or applicable retroactive period
In the case of employee injuries, for example, you would need workers’ compensation insurance. If there is damage done to your workplace property, you would need commercial property insurance (this is true whether you own or lease a space). Other types of insurance that are often recommended for business owners include professional liability or employment practices liability insurance (more on this below).
However, there are certain scenarios that will never be covered by any type of business insurance. No policy can help you if an incident takes place outside the policy period, if willful negligence was involved, or if a criminal act has taken place.
How to Protect Yourself from Most Exclusions
Thankfully there are plenty of insurance options available to protect you and your business in those situations not covered under general liability. The following are some of the more popular policy options, but an insurance expert can help you assess the exact policies that are most relevant to your business and level of risk exposure.
Professional Liability Insurance
Sometimes called errors and omissions insurance (or malpractice for healthcare workers), this type of policy will cover expenses associated with a lawsuit over professional negligence, such as missed deadlines, breach of contract, or other work-related mistakes and oversights.
Workers’ Compensation Insurance
While a general liability policy will cover third-party injuries (such as those to a client or visitor), it will not cover you for anything that happens to an employee. Most states require you to carry workers’ compensation insurance as soon as you hire your first employee. This policy will cover medical bills as well as any lawsuit expenses incurred due to work-related injuries or illnesses.
Employment Practices Liability Insurance
If an employee claims they were treated unfairly at any point during the employment relationship, this is the type of insurance you will need. It protects you from any lawsuit expenses related to harassment, discrimination, wrongful dismissal, breach of contract, or privacy violations.
Commercial Property insurance
A general liability policy covers damage to property of others, but not damage to your own property! If an employee incurs damage while at a client site, for example, you’ll be covered under general liability, but when it comes to your own property you need an entirely different type of plan. Commercial property insurance will pay to repair or replace property that is damaged, lost, or stolen.
Understand Your Coverage and Your Risks
Reading the fine print on your insurance policies is a good starting point to understanding where you are protected and where you are not. While a General Liability plan is essential for any business owner, regardless of what field you work in, it likely won’t be enough to manage all of the risks associated with business ownership.
If you have any questions about your insurance coverage or wish to expand your coverage to better protect your business or career, our experts are here to help. NOW Insurance provides policies that are simple, fast and affordable. We serve healthcare professionals, medical facilities and all types of business related classes and consultants.
You can also follow this link to get a quote in under three minutes using our easy online application form.
Contact us to learn more about our many commercial insurance options.