Relying on general liability to protect you against third-party claims and lawsuits for property damage or bodily injury is good business.
But relying on general liability to protect you from every possible risk to your business….
Well, that’s not.
Here are a few risks this essential policy doesn’t cover:
General liability is designed to cover third-party injuries, not employee injuries.
- Covered: a customer slips and falls on a freshly mopped floor in your restaurant.
- Not covered: an employee slips and falls on the floor she just finished mopping.
The key takeaway here is “third-party” – anyone who’s not you and not one of your employees.
Your employees can get hurt on the job a million ways.
- A catering deliverer could slice her finger removing a pan from a banquet cart.
- A marketing analyst could trip on a frayed piece of carpet in the office and dislocate his shoulder.
- A roofer could fall from a 12-foot height with disastrous results.
Every industry faces the risk of an employee getting hurt or sick while doing their job. That’s why workers’ compensation insurance is required in nearly every state.
Only workers’ comp provides coverage to help pay for your employees’ medical bills and lost wages after a work-related accident.
Damage to Your Building
General liability covers third-party property damage, but it typically won’t cover damage to your own property.
- Covered: your commercial kitchen oven catches fire and the flames jump to the hair salon next door, destroying your neighbor’s building, custom salon chairs, product, inventory, specialty tools, and furnishings.
- Not covered: your commercial kitchen oven catches fire and destroys your restaurant supplies, inventory, furnishings, and the building itself.
If your business is responsible for third-party property damage, general liability is designed to cover the loss. Whether that’s repairing a damaged fence or replacing destroyed inventory, GL typically has you covered.
But it’s no help if your own property is damaged or destroyed.
General liability won’t cover your own commercial building against fire, water, vandalism, theft, or extreme weather.
You’ll need commercial property insurance to protect your investment in your own building, inventory, materials, supplies, furnishings, and fixtures from covered perils.
General liability coverage can protect you against lawsuits for advertising injuries from copyright infringement. But it’s not designed to protect you against professional errors or omissions.
- Covered: your new logo and website design are a little too like the competitor's - who is suing you for copyright infringement.
- Not covered: you design a new logo and website for a client - and your client gets sued for copyright infringement.
But when you’re a professional, your mistakes could end up costing your clients.
A mistake on a shipping order could delay manufacturing of a product. A typo could result in the wrong deposit into an investment account. A construction delay could lead to a replacement contractor being brought in to finish the job.
General liability coverage isn’t designed to protect your business from lawsuits or claims arising from a client’s financial loss because of your professional mistake. Professional liability insurance, also known as errors & omissions (E&O) coverage is.
Claims not covered by general liability insurance that are covered by professional liability insurance include negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice.
Do you need professional liability insurance? If you provide a service, then the answer is probably yes.
General liability insurance can help cover the costs of numerous lawsuits, paying for the high price of attorneys’ fees, court costs, even judgments or settlements. But general liability usually won’t cover lawsuits from your own employees.
- Covered: a lawsuit from a competitor alleging reputational damage resulting from your latest marketing campaign.
- Not covered: a lawsuit from an employee alleging they were fired as punishment for a legally protected activity.
Employees are protected against unfair employment practices by a number of state and federal laws. In recent years, the number of employee lawsuits has increased - and small businesses are often the most vulnerable.
Employment practices liability insurance (EPLI) is typically not covered by a general liability policy.
EPLI covers businesses against claims or lawsuits filed by employees, former employees, or potential employment candidates.
EPLI provides coverage for legal costs, settlements, and judgments arising from:
- Sexual harassment
- Wrongful termination
- Breach of employment contract
- Wrongful discipline
- Infliction of emotional stress
Employment practices liability insurance not only covers companies, directors, officers, employees, and independent contractors from discrimination claims, it also can protect you from meritless lawsuits from disgruntled employees, too.
Are You Covered?
General liability insurance is a must-have for your business. With general liability in place, you won’t have to pay out of pocket for a claim or lawsuit for third-party property damage, bodily injury, advertising damages, or reputational injury.
Every business can benefit from this essential coverage.
Your business may need a little extra protection, however.
GL protects against a broad spectrum of lawsuits, but it doesn’t provide all-inclusive coverage. Talk to your insurance agent today to find out what additional policies can benefit your individual business.