There’s a lot of peace of mind 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 just as important as understanding what it can cover. The ideal time to learn what’s covered and what’s not is before you get a policy. As you take into account your policy purchase, determine what is excluded. As soon as you receive your present liability policy paperwork, it might be tempting to file it away and move on 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 next exclusions found in nearly all general liability insurance policies.
General Liability Excludes Professional Liability
General liability insurance may be the most common type of business liability insurance. Basically, it is designed to protect your organization in the event that someone alleges they were injured or their property was damaged due to your negligence.
A 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 for example libel and slander; and invasion of privacy. A BOP also contains property insurance that covers both your own and others’ business property.
What’s missing? Claims linked to professional negligence or failure to perform your professional duties.
Lawsuits linked to such claims have put many small companies out of business. In fact, for many professional services firms, the liability risk associated with professional errors & omissions and negligence could be far greater compared to 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 known as errors and omissions or E&O coverage.
Unfair or Discriminatory Employment Practices Are Not 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 linked to demotion, reassignment, employee evaluation, discipline, harassment, and other employment-related policies.
In short: if a worker alleges she or he was treated unfairly or that you acted illegally in your dealings using them, a general liability policy will most likely not respond. These exclusions apply not merely for employees currently on staff, but also to job applicants, contractors, and former employees who no more work for you.
If Market Traders Insurance worried about claims linked to employment-related practices, you should consider buying employment practices liability insurance (EPLI), which covers your legal liability for a few claims linked to wrongful termination, discrimination or sexual harassment.
If your business is like many smaller businesses, you occasionally depend on subcontractors to get the work done. If so, it is critical to be clear about how your general liability insurance pertains to your subcontractors – or even more importantly, how it could not.
With some insurance carriers, claims due to independent contractors focusing on your behalf aren’t covered by your general liability insurance policy. On the other hand, some general liability insurance policies are very broad and not just cover you, in case a contractor makes a mistake, but also cover the contractor directly. Obviously, is essential to know in advance the method that you should expect your policy to perform.
What Everyone Ought To Know About GENERAL LIABILITY INSURANCE
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