[This guest article was written by Kevin Kerridge.]
You purchased your commercial general liability policy to protect your business against liability claims including property damage, bodily injury, and personal or advertising injury. But you may want to look into the specifics of what your policy covers and make sure all of your potential risks are covered.
The commercial general liability policy (CGL) is not an all-inclusive policy that protects your business from every sort of liability. There are a number of exclusions to a CGL that other special policies provide coverage for. For your own piece of mind, examine the following common exclusions and review your liability coverage, noting any gaps in coverage.
Keep in mind that coverage or policy limits varies from provider to provider. Therefore, if you have any questions make sure you contact your agent.
This coverage protects the insured from errors, negligence, misleading statements and other related claims that stem from the performance of professional services. If you are in the business of providing a service or giving advice then you should consider a professional liability policy.
This is generally known as errors and omissions insurance by lawyers, architects, engineers or other similar professions. For doctors and others in the medical professions, it is known as malpractice insurance. However, professional liability protects a variety of professions, from advertising agencies to web hosting to wedding photographers.
Damage to Your Work
In general, property damage to your work is not covered. For example, as a building contractor, you build a pergola for a client. They put a hot tub under it and the pergola collapses, destroying the hot tub. Your CGL policy will likely cover the replacement of the hot tub, but will not cover the repair to the pergola, for it was your work.
Damage to Your Product
Your CGL policy won’t cover the damage to your product if your product led to the damage. For example, you install a water heater that fails and causes extensive water damage to the floor of a home. Your policy will cover the repairs to the home but not to your product if it malfunctioned.
If you own, lease or rent vehicles for your business, you need a separate business auto insurance policy.
Recall of Products or Work
Your CGL policy won’t cover the costs associated with recalling faulty products or work. However, if you manufacture anything subject to a recall, you might want to look into this additional coverage.
If you obligate yourself in a contract to assume liability for any bodily injury or damage to property, your CGL policy will exclude the coverage. There are some exceptions for this. For example, your policy would cover any damages that you would be liable for anyway even without the contract.
This is hardly an exhaustive list. These are some of the more common exclusions a typical business owner should be aware of. A few other exclusions to a typical CGL policy include pollution insurance, corporate directors’ and officers’ liability, and workers’ compensation. Again, if you have any questions as to your coverage or risk exposure contact your agent.