There’s a lot of satisfaction that comes from knowing your small business is insured. But it is important to understand your business’s risks and what the various types of business insurance are designed to cover.
For example, understanding what general insurance is not intended to cover is simply as important as understanding what it does cover. The ideal time and energy to learn what’s covered and what’s not is before you get a policy. As you take into account your policy purchase, know what is excluded. As soon as you receive your general liability policy paperwork, it may be tempting to file it away and get to the next challenge. But, before you let your guard down, take a little time to be sure 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 type of business liability insurance. Basically, it is designed to protect your company in the event that someone alleges these were injured or their house was damaged because of your negligence.
A SMALL 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 execute your professional duties.
Lawsuits linked to such claims have put many small companies out of business. Actually, for many professional services firms, the liability risk associated with professional errors & omissions and negligence could be far greater than the bodily injury and property damage risks covered by a general liability policy.
To protect your organization against such claims, you’ll need to purchase separate professional liability insurance, also called errors and omissions or E&O coverage.
Unfair or Discriminatory Employment Practices AREN’T Covered
A typical 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, along with other employment-related policies.
In short: if a worker alleges he or she was treated unfairly or that you acted illegally in your dealings with them, a general liability policy will usually not respond. 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 may want to look into buying employment practices liability insurance (EPLI), which covers your legal liability for some claims linked to wrongful termination, discrimination or sexual harassment.
Subcontractors
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 could not.
With some insurance carriers, claims caused by independent contractors focusing on your behalf aren’t covered by your general liability insurance coverage. Alternatively, some general liability plans are very broad and not just cover you, if a contractor makes a mistake, but additionally cover the contractor directly. Obviously, is Insurance for crafters to know in advance the way you should expect your policy to perform.