The general liability insurance policy for your small business will likely include bodily injury, property damage, personal injury, and advertising liability coverage. Because these are liability coverages, the adjuster will investigate whether your actions resulted in resulted in damage to another party. If so coverage will be afforded to the injured third party. If not, defense will be afforded and coverage to the third party denied. A small business insurance policy also may have medical payments coverage which pays for bodily injury that occurs regardless of fault.
With these broad categories of liability, many small business owners think that they are covered for all claims made against them. However, there are some key items that are normally excluded. Fortunately, you can purchase coverage for most through endorsement or a separate policy.
Liquor liability- small businesses only have coverage for host liability (i.e. you allow liquor to be consumed at your company picnic and damage occurs). However, if a small business charges, is licensed to provide liquor, or are in any other way is in the business of providing liquor, this risk of loss is excluded.
Employment Law Violations- there are several different laws which relate to your practices with your employees or other fiduciaries. Claims that would be covered under workers compensation, ERISA, RICO, securities laws, discrimination, or fiduciary laws are excluded. A small business can purchase a separate insurance policy for these coverages. Also some business owners policies include ERISA/EPL/or employee benefits endorsement with the policy.
Pollution/Asbestos- due to the severity of claims and treatment of these claims on a claims made basis, pollution and asbestos claims are excluded. Only a small number of businesses will need these insurance. Dry cleaners and various construction or contractors will need to purchase these policies separately.
Damage to Property Owned or In Your Care Custody or Control- the definition of insured includes volunteers and employees, as well as the executive members of the organization. So, the property of volunteers, employees, and executive members will not be covered if damaged while they are performing duties for the insured organization.
Data Breach- it is 50/50 whether your policy will provide limited data breach or loss of data claims. Many carriers are adding on a limited amount of coverage for loss of data which is caused by actual physical damage. However, many carriers will not endorse the general liability policy but issue a separate policy.
Work Product/Professional Services- malpractice claims and product recall claims for are excluded but, as with the other exclusions, a separate policy can be purchased to obtain coverage for this risk of loss.
Expected or Intended Actions- just as with the property exclusions, actions for which there was no risk are not covered. If anyone defined as an insured commits acts which were intended to cause bodily or personal or other injury or could have been expected to cause those injuries no coverage will be extended.