What Is Not Covered by General Liability Insurance?

General liability insurance is a must-have for businesses. It provides vital protection against a range of risks, including third-party bodily injury, property damage, and advertising injuries. However, like all insurance policies, general liability insurance has its limitations. Knowing what isn’t covered under this type of policy is just as important as understanding what is. Armed with this knowledge, you’ll be better equipped to fill any gaps in coverage and protect your business from unforeseen liabilities.

Here’s a breakdown of what general liability insurance typically does not cover and your options for additional protection.

1. Employee Injuries

General liability insurance does not cover injuries sustained by your employees while they’re on the job. For example, if an employee slips and falls at the workplace, general liability insurance won’t cover their medical expenses or lost wages.

What You Need Instead:

To address this gap, you’ll need workers’ compensation insurance. This type of insurance covers medical costs, rehabilitation expenses, and lost wages for employees who experience work-related injuries or illnesses.

2. Professional Errors

If your business provides advice, consulting, or professional services, you could be held liable for any mistakes or oversights that cause financial harm to a client. However, these types of claims fall outside the scope of general liability insurance.

What You Need Instead:

To safeguard against risks tied to professional mistakes, you’ll need professional liability insurance (also known as errors and omissions insurance or E&O). This policy is specifically designed to cover claims related to professional negligence, misrepresentation, or incomplete work.

3. Damage to Your Own Business Property

General liability insurance only covers third-party property damage, meaning it won’t cover damage to your own physical business assets such as buildings, inventory, and equipment. For instance, if your workplace is damaged in a fire, general liability insurance won’t pay for property repair or replacement.

What You Need Instead:

You’ll need commercial property insurance or a business owner’s policy (BOP) to protect your business’s physical property from events like fire, theft, or vandalism.

4. Intentional Acts

General liability insurance does not cover damages or injuries that result from intentional or malicious acts by you or your employees. For example, if an employee intentionally damages a client’s property, this won’t fall under your general liability policy.

What You Need Instead:

Intentional acts are considered uninsurable by most policies. The best way to avoid these risks is through clear policies, workplace training, and effective management to prevent such incidents from occurring.

5. Automobile Accidents

If your employees use vehicles for work purposes, general liability insurance won’t cover accidents or damages caused during business-related driving. For example, if one of your employees causes an accident while delivering goods, this would not be covered under your general liability policy.

What You Need Instead:

You’ll need commercial auto insurance to cover accidents involving vehicles used for business purposes. If employees use their personal vehicles for work, consider adding hired and non-owned auto insurance (HNOA) for extra coverage.

6. Employment Practices Claims

Claims related to how you manage or treat employees, such as wrongful termination, harassment, or discrimination, are not covered by general liability insurance. These claims typically fall under employment law and carry their own set of risks.

What You Need Instead:

To protect against these types of claims, consider employment practices liability insurance (EPLI). This policy covers claims related to harassment, discrimination, and wrongful termination, among other employment-related disputes.

Key Takeaways

While general liability insurance provides essential coverage for many risks, it’s important to recognize its limitations. Many potential liabilities, such as employee injuries, professional errors, or cyberattacks, require additional specialized policies to ensure comprehensive protection for your business.

By understanding what general liability insurance does and doesn’t cover, you can craft a tailored insurance strategy that suits your unique business needs. Avoid costly gaps in coverage and protect your company from the unexpected.