Things Not Covered by General Liability Insurance

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Contributor, Benzinga
October 25, 2022

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General liability coverage is probably the most important coverage you need when you have a business because it protects your business against most lawsuits, bodily injuries, property damage and advertising injuries. However, general liability insurance doesn’t protect a business from every type of common risk that it can be subjected to. In this article, Benzinza drills down to reveal potential gaps in coverage so you are not 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 might be surprised by some of the incidents and occurrences that are not covered by the general liability policy you currently hold for your business:

#1 Damages to your property that you or an employee caused. Only damage caused by a third party or customer is covered for a general liability claim.

#2 Employee injuries are not covered. Workers' compensation coverage steps in 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 a fleet policy. If your employees use their own autos when working for you and only have personal automobile coverage, they will not have the proper coverage and their policy will not pay for the damage.

#5 Professional errors made by faulty workmanship or advice given by you or your employees are not covered. You would need to purchase professional liability insurance, malpractice policy or Errors and Omissions policy that is specific to your industry.

#6 Coverage for legal fees is not part of general liability coverage.

#7 Business interruption coverage doesn’t fall under your general liability policy. For example, if a fire damaged your business and required that you move to a temporary facility, you’d 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 from theft, floods and fires.

#9 Product liability insurance, which is not part of general liability, protects you against claims made from your products.

#10 Directors and officers who hold seats on the board of public, private or non-profit entities pose a risk that is not part of general liability coverage.

#11 Pollution liability coverage protects third parties from pollution caused by your business activities and includes property damage, personal injury and clean-up costs to remove hazardous substances to restore your property to a safe condition. A general liability policy doesn’t protect against this risk.

#12  Businesses that collect or maintain user or corporate data need cyber insurance. Your general liability insurance policy does not cover this risk.

Umbrella Insurance

An umbrella policy offers excess liability coverage for the most expensive lawsuits. It can make up for the difference in coverage for the liability claims that exceed general liability insurance limits.

The umbrella can supplement general liability, commercial auto, non-owned auto insurance and employer’s liability policies.

Typically, umbrella coverage doesn’t cover business property damages, employee theft and damages to business 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 in a business that could potentially result in a claim. Common risks that carriers look for are claim reoccurrence, vehicle accidents, driver injuries, theft, policy cancellation and frequency of claims.

Compare General Liability Insurance

Benzinga’s list provided here compares the best insurance companies for you to get a quote for general liability insurance and the additional riders and supplements to be fully protected as a business owner. 

Frequently Asked Questions

Q

What are deductibles and how do they affect the premium?

A

A deductible is an amount you would pay out of pocket in response to an incident that results in a claim on your policy. The higher the deductible, the lower the premium because you are sharing the claim payout. Insurance companies reduce rates when you elect a larger deductible as it is less likely you will 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 in the terms of your coverage and can be found on the declarations page of standard policies.

Q

Is liability insurance the same thing as business insurance?

A

Business insurance and liability insurance are not the same thing. Liability insurance only covers damage and injuries that your business makes to a third party. Business insurance covers damage to your business property and employees.