The fine line between certain insurance policies can be unclear at best and detrimental at worst. People often misunderstand their coverage, leaving them to be blindsided after a claim is denied for an accident not covered under their policy as they thought it would. General Liability Insurance
There is a line between general liability and professional liability that can often be misunderstood and overstepped. It’s crucial for insurance clients to understand the difference so they know when they’re covered and when they’re not.
What Does General Liability Insurance Cover?
General liability insurance covers accidents and non-professional negligence that result in bodily injury or property damage of a third party. Non-professional negligence refers to negligence that doesn’t relate to professional or expert services. For example, if a customer is burned by a hot plate in a client’s restaurant, this incident is a general liability accident and should be covered under this insurance. On the other hand, if an accountant makes a numerical error and costs a client money, this issue would be an act of professional negligence and wouldn’t be covered under general liability insurance.
General liability insurance as two parts:
• Medical Expense: The medical expense side of general liability provides compensation to a client that suffers an injury as a result of an accident on the property. This can also cover injury caused by a product made or provided by the policyholder.
• Legal Expense: General liability also provides the policyholder compensation for legal fees if the victim decides to sue, such as attorney expenses, court fees and settlement costs.
General liability insurance can also cover claims of personal or advertising injury, such as libel, slander and copyright infringement.
Exclusions to General Liability Insurance
Common exclusions to general liability insurance policies include:
• Criminal acts
• Intentional damage or injury
• Professional negligence
• Claims regarding workers compensation
There are ways to combat these exclusions by adding coverage. Educate your clients on the different types of liability insurance they can add to their overall commercial policy. Important and common liability coverages are:
• Directors and Officers Liability: Also known as D&O insurance, directors and officers liability covers a company’s board members in case of claims concerning accidents or acts committed while serving on the board.
• Liquor Liability: Liquor liability insurance is specifically useful for restaurants, bars, gas stations and other industries that provide alcohol. It protects the business in case of claims related to a patron’s actions after purchasing or consuming alcohol from the business.
• Pollution Liability: Pollution liability insurance protects a business from claims regarding bodily injury, property damage and earnings losses.
• Professional Liability: Professional liability insurance concerns professional negligence and covers claims where a client lost money or otherwise suffered due to a professional mistake.
Clients should also be aware that they can bundle some of these coverages into a business owners policy or commercial package policy. These packages, tailored for small businesses and large businesses respectively, combine important business coverages into one, often more affordable policy.
Either can be enhanced with an umbrella liability insurance policy, which steps in when other liability insurances reach their maximum cap. An umbrella policy can be used on any of the above liability coverages and more.
Personal General Liability
Not all clients will own or want to own a business. General liability also comes as part of basic home and renters insurance policies. Homeowners and renters should be aware of their liability limits. If they live in a high-risk area for lawsuits, host a lot of gatherings or work a high-risk job, they may want to consider higher general liability limits.