What if your business faced a sudden and unexpected liability claim? Would your insurance have you covered? Maybe you’ve already considered commercial general liability (CGL), but do you know what it actually protects you against? Understanding what liabilities are not covered under a CGL policy can save you time, money, and sleepless nights.
Overview of Commercial General Liability Policy
A commercial general liability policy exists to protect your business from claims that could result in financial losses. It typically covers bodily injury, property damage, personal injury, and advertising injury. But it’s equally important to grasp the limitations of this policy.
The Importance of Knowing Exclusions
Many businesses mistakenly believe that CGL policies cover all potential liabilities. The reality is that exclusions exist for specific cases. Knowing these exclusions is vital for making informed decisions about your insurance coverage.
Common Exclusions Under Commercial General Liability Policies
Understanding the common exclusions can provide better insights into other insurance products you might need. Below are notable categories of liabilities typically not covered.
1. Professional Liability
Does your business provide professional services? If so, your CGL won’t cover any claims related to professional advice or services. This includes errors or omissions in your work. To protect against this, consider a separate professional liability policy, often referred to as errors and omissions insurance.
2. Employee Injuries
Let’s say an employee gets injured while working. You might think your CGL would cover medical expenses, but that’s not the case. Employee injuries are generally covered by workers’ compensation insurance, not your CGL policy.
3. Damage to Property You Own or Rent
What if you damage property that your business owns or rents? CGL policies typically do not cover damages to property you occupy or own. This exclusion highlights the need for property insurance and other related policies to cover physical assets.
4. Contractual Liabilities
If your business enters into a contract and then fails to fulfill it, your CGL policy generally does not cover any financial loss resulting from that breach. This reality is especially crucial for businesses that regularly enter contracts with clients or other partners. You might want to consider business interruption insurance or specific contract-related coverage.
5. Intentional Acts
Imagine a scenario where someone intentionally damages property or causes bodily harm. Your CGL policy will not cover injuries or damages resulting from intentional acts, as coverage exists to protect against unforeseen incidents, not deliberate behavior.
6. Pollution-Related Claims
If your business is involved in any pollution or environmental damage, your CGL policy likely excludes coverage for these claims. Businesses like manufacturing or chemical processing should explore specialized environmental insurance to secure proper coverage.
7. Vehicle-Related Incidents
If your business uses vehicles, you will need a separate commercial auto insurance policy. Your CGL will not cover liabilities resulting from vehicle accidents. This point is particularly crucial for businesses that rely heavily on transportation.
8. Liquor Liability
For businesses that serve or sell alcohol, your CGL may not cover damages resulting from alcohol-related incidents. You might want to consider a liquor liability policy to protect against lawsuits that could arise from serving alcoholic beverages.
9. Cyber Liability
As companies increasingly rely on digital platforms, cyber threats have become common. Unfortunately, CGL policies do not cover losses from data breaches or cyber-attacks. A separate cyber liability policy can help safeguard your business in this digital age.
10. War and Terrorism
Any losses arising from acts of war or terrorism are not covered by your CGL policy. While these are less common, they pose significant threats, potentially leading to large financial losses. Businesses may need special coverage options for these risks.
The Importance of Supplemental Coverage
Every business is unique with its own risks and challenges. A general liability policy may serve as a foundation for your coverage, but it shouldn’t be the only layer of protection your business relies upon. Supplemental policies provide additional coverage where your CGL policy falls short, helping to manage your risks better.
Why Talk to an Insurance Professional?
Consulting with an insurance professional can clarify your business’s specific needs. They can help you identify gaps in your coverage and suggest additional policies that will comprehensively protect your interests.
Case Study: A Real-World Example
Imagine you own a small catering business. You have a CGL policy, and you believe you’re well protected. One day, an employee slips and falls while setting up an event and sustains injuries. You assume your CGL will cover this incident, but it doesn’t. Instead, workers’ compensation covers employee injuries, leading to unforeseen financial stress.
If your employee had caused damage to a rented kitchen while preparing for the event, your CGL might also fail to cover those costs. This scenario emphasizes the need for a well-rounded insurance strategy beyond just basic liability coverage.
Final Thoughts
Knowing what liabilities are not covered under a commercial general liability policy is critical for any business owner. You don’t want to be blindsided by unexpected claims that leave you financially vulnerable. Understanding exclusions and considering supplemental coverage can provide peace of mind.
When in doubt, reach out to an insurance professional or public adjuster. They can help you understand your unique risks and advise on the best insurance solutions for your business.
Remember, everyone deserves to have coverage that truly protects them. If you’re in Florida, Otero Property Adjusting & Appraisals is here to help with claims big or small. Our team acts as a negotiator between you and your insurance company, ensuring you get the compensation you rightly deserve.
Whether you’re dealing with hurricane damage, water issues, mold, or a minor kitchen fire, Otero Property Adjusting & Appraisals has your back, always standing ready to ensure you receive everything you’re entitled to under your policy.
Contact us today at:
Otero Property Adjusting & Appraisals
3105 W Michigan Ave, Pensacola, FL 32526
(850) 285-0405
Otero Adjusting
Remember, insurance doesn’t have to be a maze. With the right knowledge and support, you can navigate it effectively. And knowing what your CGL policy does not cover is the first step toward securing a sound financial future for your business.
