Whether you run a bakery, a barber shop, or a large construction firm, general liability insurance is one of the most important insurance policies you can invest in. Liability insurance is so important it’s considered the foundation policy for every business insurance coverage. It protects you from lawsuits resulting from a wide range of incidents, including:
- Bodily injuries
- Property damage
- Advertising injuries
While this broad policy covers a lot, it’s important to know what it doesn’t cover.
5 Things Your General Liability Insurance Doesn’t Cover
When you’re aware of the gaps in your policy, you can take action to be sure you’re not leaving yourself exposed to unnecessary risks which could cost you big in the long run.
Damages To Your Own Property
General liability insurance does cover property damages, but only under specific circumstances. General liability insurance is designed to protect you from third-party lawsuits, which means it only covers damages to your property by an outside party, like a customer.
If you or one of your employees drives a tractor through your own window, your general liability policy typically won’t cover it.
Because your policy only covers third-party damages, it doesn’t cover intentional damage done to your own product or property by you or one of the insured parties on your policy (like a subcontractor or employee).
Let’s say your best employee is having the worst day ever. In a moment of uncharacteristic anger, he takes his frustrations out in the worst way possible - by hurling a wrench through someone’s window.
Normally, damage to someone else’s property that is your (or your employee’s) fault would be covered under your general liability policy. But not in this case. Because intentional damage is never going to be covered by any insurance policy.
It’s important to make sure you conduct yourself professionally, don’t intentionally cause any damage to anyone’s property, and to ensure your employees follow the same guidelines.
General liability insurance may not cover accidents resulting in injuries to your employees, only accidental third-party injuries. For example, if a customer slips and falls in your restaurant, general liability can cover it. If one of your waitresses slips and hurts herself, however, your policy may not be able to cover her medical expenses or a potential lawsuit.
To keep your employees safe, it’s important to have workers compensation insurance in addition to your general liability insurance. In fact, in most states you’re legally required to have workers comp if you have employees.
Your general liability insurance policy will typically exclude any vehicles used for your business. Furthermore, if you use your personal vehicle for work purposes, your personal auto insurance might not cover damages that occur while your vehicle is being used for work purposes, either.
Whether you have a fleet of pizza delivery vehicles, or one truck for hauling tools to construction sites, you’ll need commercial auto insurance to cover vehicular accidents.
It’s important to remember that general liability insurance doesn’t cover professional errors made by you or your employees. This means that general liability typically won’t cover faulty workmanship or lawsuits over poor advice given to a customer. For professional mistakes, you’ll need a different type of coverage, professional liability insurance.
While general liability insurance protects you from lawsuits resulting from a variety of types of accidents, there are certain events most general liability policies don’t cover.
It’s important to remember that your general liability policy covers accidental damages leading to a lawsuit from a third-party. Relying solely on your general liability insurance will leave you with gaps in your coverage that can become expensive if you or an employee cause damage to your property.