What General Liability Insurance Doesn’t Cover

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Operating a business can be risky. Lawsuits happen every day, and when you operate a business or work with clients, there’s a good chance one could happen to you.

Not to be negative, but it’s true.

And lawsuits mean attorney fees, court costs, and the possibility of a judgement so large your business couldn’t pay the bill.

It may sound like a far-fetched scenario, but it happens more than you might think.

As a matter of fact, lawsuits are so common that most states require your business to carry general liability (GL) insurance.

If you are sued and have GL coverage, your insurance company pays for:

  • Judgements and damages you owe to the person suing your business
  • Attorney fees
  • Miscellaneous court costs, including evidence expenses

But being covered doesn’t protect you from every lawsuit under the sun.

Here are some things that your liability policy doesn’t cover:

Your Property

The good news is that GL does cover third-party property damage.

The kind of damage that occurs when your employee accidentally backs your work truck across the lawn and through the fence of a neighboring home during a remodel project.

Hey, he thought he was in “Drive.”

It was an accident.

GL covers this, and many other kinds of property damage. But it doesn’t cover damage to your own property.

If your property is damaged, don’t look for GL to cover it. You will need commercial property or builders risk coverage for that.

Your Vehicles

10 million. That’s the number of auto accidents that happen each year.

That’s nearly 3,000 accidents every day.

General liability doesn’t cover your vehicles if you, or one of your employees, is involved in an auto-accident in your work truck.

And neither will your personal auto policy. (Not if you are using your vehicle for business purposes.)

That’s why contractors add commercial auto coverage to their GL coverage; because trucks, vans, and other vehicles are crucial to getting the job done.

Your Employees

When a neighbor or homeowner accidentally gets injured on your jobsite, GL covers it. Any third-party bodily injury is part of that coverage.

Your employees, however, are a different story.

And since construction is one of the riskiest businesses out there, your guys are putting their safety on the line each time they show up to do their job.

Workers’ comp insurance is there to cover the medical expenses, lost time, and other costs associated with an injury to one of your employees.

Your GL policy won’t cover any of these things.

If you have employees and only GL, you could be looking at a big expense when one of your employees gets hurt on the job.

What’s Covered with General Liability… and What’s Not.

To sum up, here’s an easy way to remember what GL covers, and what it doesn’t:

  • General liability is there to protect your business from third-party (non-employee) lawsuits.
  • The keyword is third-party; if it belongs to you, GL doesn’t cover it.

If a person not involved in your business wants to file a lawsuit over property damage, bodily injury, accidents that happen on your property, reputation damage, or even copyright infringement, GL will protect your business from a potentially devastating loss.

General liability is a great foundation for protecting your business. When you start adding additional coverage for your employees, vehicles, and projects to GL, then you end up with a business that is ready to weather just about anything.