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General liability coverage is probably the most important coverage you need when running a business, as it protects your business against most lawsuits, bodily injury, property damage, and listings. However, general liability does not protect a business against all common types of risks to which it may be subject. In this article, Benzinza digs deeper to reveal potential gaps in coverage so you aren’t exposed to unnecessary risks not covered by general liability insurance.
Depending on the type of business you operate, you can add the policies described below to supplement your existing liability insurance.
What is not covered by general liability?
You may be surprised by some of the incidents and events that are not covered by the general liability policy you currently hold for your business:
#1 Damage to your property caused by you or an employee. Only damage caused by a third party or the customer is covered for a general liability claim.
#2 Employee injuries are not covered. Worker’s Compensation coverage goes here.
#3 Intentional or deliberate damage is not covered by a general liability policy.
#4 Vehicles will not be covered if your business or you personally own them because you need another policy in place called a commercial auto policy or fleet policy. If your employees use their own automobile while working for you and they only have personal auto coverage, they won’t have the proper coverage and their policy won’t pay for the damages.
#5 Professional errors due to poor workmanship or advice given by you or your employees are not covered. You will need to purchase professional liability insurance, a malpractice policy, or an errors and omissions policy specific to your line of business.
#6 Legal expense coverage is not part of general liability coverage.
#7 Business interruption coverage does not fall under your general liability insurance policy. For example, if a fire damaged your business and forced you to move to a temporary facility, you would need business interruption coverage to manage that risk.
#8 General liability coverage does not protect your property. Commercial property insurance is a must for all businesses as it covers property and inventory against theft, flood and fire.
#9 Product liability insurance, which is not part of general liability, protects you against claims made from your products.
#10 Directors and officers who sit on the board of directors of public, private, or not-for-profit entities present a risk that is not part of general liability coverage.
#11 Pollution liability insurance protects third parties against pollution caused by your business activities and includes property damage, bodily injury, and cleanup costs to remove hazardous substances to restore your property to a safe condition. A general liability insurance policy does not protect against this risk.
#12 Companies that collect or retain user or company data need cyber insurance. Your general liability insurance policy does not cover this risk.
An umbrella policy provides excess liability coverage for the costliest lawsuits. It can offset the difference in coverage for liability claims that exceed general liability insurance limits.
The umbrella can supplement general liability, commercial auto, non-owner’s auto, and employer’s liability insurance policies.
Generally, umbrella coverage does not cover damage to company property, employee theft, and damage to company vehicles.
How to assess your insurance risks
When an insurance broker submits a request for a general liability quote, an underwriter conducts a risk assessment to calculate what can go wrong with a business that could potentially result in a claim. Common risks sought by carriers include recurrence of claims, vehicle accidents, driver injuries, theft, policy cancellations and claims frequency.
Compare liability insurance
Benzinga’s list provided here compares the best insurance companies so you can get a quote for general liability insurance and additional endorsements and supplements to be fully protected as a business owner.
Frequently Asked Questions
Some popular general liability insurance questions.
Should I use a broker who deals with several insurance companies?
A broker helps you obtain competitive coverage by requesting quotes for your business from multiple insurers to facilitate an apples-to-apples comparison. A broker :
- Review your business and determine your risks and the policies you need
- Assess the amount of coverage needed and policy limits for each coverage
- Determine which additional endorsements would benefit your policy
- Review your deductibles
- Evaluate your insurance history for each risk you have
- Determine the value of assets, equipment and furniture based on the various potential losses
- Review loss control programs, including logbook support specific to your business
What are deductibles and how do they affect the premium?
A deductible is an amount you would pay out of pocket in response to an incident resulting in a claim on your policy. The higher the deductible, the lower the premium, because you share the payment of the claim. Insurance companies lower rates when you choose a higher deductible because you’re less likely to make a claim.
Deductibles can be either a specific dollar amount or a percentage of the total amount of insurance on a policy. The amount is stated in the terms of your coverage and can be found on the declarations page of standard policies.