Most business owners hear the phrase “general liability insurance” and assume that they are covered against “general” liabilities.
This assumption could not be further from the truth.
The fact is, as a business owner, your general liability insurance coverage isn’t enough to protect your business from every foreseeable risk.
What is General Liability Insurance?
Also known as business liability insurance, general liability insurance protects your business against bodily injury, property damage, and libel/slander caused to a third party.
Liability insurance is one of the most useful types of insurance coverage you can have for your business, which is why it’s included in a traditional BOP (along with property insurance and business interruption insurance).
However, there are still significant areas of risk that a general liability policy leaves unprotected.
While it’s helpful to have in the event a customer at your restaurant slips and falls while your busser is mopping the floor, it won’t do anything if a fire breaks out in your commercial kitchen.
What Does Liability Insurance Cover?
General liability insurance coverage encompasses any property damage or physical injury your business might cause to a third party (i.e. someone other than the business and its employees).
This typically involves four areas of coverage.
Third-Party Bodily Injury
If one of your servers runs a cart over a customer’s foot or a drops a box on them while stocking the shelves, your general liability policy will cover their medical care (and, in some cases, your legal fees for any resulting lawsuits).
Third-Party Property Damage
People have been joking about “spilled coffee” lawsuits since the ’90s but, if that hot coffee were to ruin your new iPhone X, you wouldn’t be laughing.
General liability insurance would be able to cover all or some of the costs related to replacing a third party’s damaged property.
Another area of risk that often goes overlooked is product liability.
General liability insurance would kick in if bodily injury or property damage occurred in the normal operation or use of your product (for example, if a customer became seriously ill after eating at your restaurant or if your most popular curling iron burned off her hair).
What’s Not Covered Under General Liability Insurance?
Although a necessary part of every business owners’ insurance needs, general liability insurance isn’t enough on its own.
No matter what type of business you have, there are some additional policies that are just as vital.
Errors and Omissions (E&O)
Also known as malpractice insurance, E&O protects your business against anything you might say, do, or fail to say/do that causes injury or damage to a third party.
An obvious example would be a doctor who messes up a serious operation, but even retail stores and tech companies need E&O insurance.
What if your IT company recommended a certain brand of virus protection and a customer suffered a data breach? Or you missed a glaring problem during a routine home inspection and now the homeowner has water pouring into their roof?
Even if you hate to admit it, no one is perfect; E&O insurance can help to patch things over if something goes awry.
General liability insurance coverage extends to customers, but not employees. For that, you need workers’ comp insurance.
Unlike general liability insurance, workers’ comp in Florida is legally required if you have more than four employees (or one employee, if you work in construction).
Regardless of how “safe” you think your business is, workers’ compensation insurance is a must-have for any business, even if your business isn’t mandated to carry it.
Business Property Damage
To use an earlier example, general liability insurance wouldn’t cover you if a fire broke out in your kitchen and damaged thousands of dollars of equipment. Nor would it cover you for hurricane-related damage, theft, or commercial auto accidents.
To protect your business property, you would need commercial property insurance (typically included in a BOP bundle), commercial auto insurance, flood coverage, liquor liability, and any other forms of coverage dictated by your business.
Your local independent insurance agent can advise you on what policies are best for you.
Employee Discrimination Lawsuits
Whether it was intended or not, employee discrimination lawsuits happen all the time.
If you have any employees at all, Employment Practices Liability Insurance is a necessary part of your insurance arsenal. EPLI protects against lawsuits from interviewees, employees, and ex-employees who accuse your company of harassment or discrimination.
As a rule, any independent contractors you hire are not covered under your general liability policy.
If you want to cover them, you will have to add them to your policy. Otherwise, they can purchase their own general liability plan.
You Need More Than Just General Liability Insurance
General liability insurance coverage is a great thing to have, but it shouldn’t be your business’ only form of insurance.
When it comes to risk, your business is vulnerable to far more than accidents relating to third parties. Relying on general liability insurance alone leaves your employees and your business itself at risk. That’s why we recommend that all policyholders—commercial and residential—carry as much coverage as they can afford.
If you’re reading this and sweating bullets or feeling nervous about your lack of coverage, you’re not alone. Not only are thousands of Florida homeowners in the same situation, Harry Levine Insurance is ready and willing to help you get the coverage you need!