Knowing that your small business is covered can give you a lot more peace of mind. It is essential to fully understand the risks of your business and what types of insurance you need to protect it.
Understanding what general insurance does not cover is as important as understanding its coverage. Before you buy a policy, the best time to determine what is covered and what is not. Consider what exclusions you will need to include in your policy purchase. It can be tempting to just file your general liability policy paperwork and move on to the next task once you have it. Be sure to review your policy carefully before you relax and file it away.
These exclusions are found in almost all general liability policies.
General Liability Excludes Professional LIability
The most popular type of business liability insurance is general liability insurance. It protects your company against claims that others have made against you for injury or property damage.
The Business Owner’s policy covers general liability, which includes bodily injury, property damage and personal injury. This includes copyright infringement, defamation (e.g. libel or slander) and invasion of privacy. Property insurance is also included in a BOP. It covers your business and other people’s property.
What’s missing? You can bring a claim for professional negligence.
Many small businesses have been forced out of business by lawsuits arising from such claims. Many professional service firms find that the liability risk from professional errors & oversights or negligence is much greater than the risks of bodily injury or property damage covered by a general insurance policy.
You will need separate professional liability insurance to protect your business from such claims. Also known as E&O or errors and omissions coverage,
It is not covered for unfair or discriminatory employment practices
The typical commercial general insurance policy doesn’t cover discriminatory or unfair employment practices. This includes hiring and terminating employees. All claims relating to demotion, resignation, employee evaluation, discipline and harassment are also excluded.
A general liability policy won’t usually respond to an employee who alleges that he or she was unfairly treated or that you acted illegally with them. These exclusions do not apply to employees, but also job applicants, contractors, former employees, and employees who are no longer employed by you.
You might be concerned about potential claims arising from employment-related activities. Consider purchasing employment practices liability insurance (EPLI). This covers you for certain claims, such as wrongful termination, discrimination, or sexual harassment.
Subcontractors
Your business may rely on subcontractors from time to time, as many small businesses do. It’s important to understand how your general liability insurance applies and, more importantly, what it may not.
Some insurance companies won’t cover claims made by independent contractors who work on your behalf. However, general liability policies can cover you if a contractor makes mistakes, as well as the contractor directly. It is essential to understand how your policy should perform before you buy it.
Get to Know Your Policy
One reason to work with a broker or agent who is knowledgeable about policy exclusions is because they can be very costly. Your job description should be clear when you buy your policy. This will allow your agent to ensure that you are covered for any risks that may arise on the job. You can ask your broker or agent to clarify if a particular concern is covered under your general liability policy.