Don’t Leave Your Business Exposed: Find Out the Coverage and Exclusions of Comprehensive General Liability Policies

Don’t Leave Your Business Exposed: Find Out the Coverage and Exclusions of Comprehensive General Liability Policies

Every business, even a small business run as a side-hustle out of one’s home, needs liability insurance to protect itself and its owners. In Texas, insurers have two responsibilities to the insured—the duty to indemnify and the duty to defend. Thus, insurers pay all covered damages or losses that result from doing business, as defined under the insured’s policy. Additionally, insurers also provide insured parties with legal defense from a claim that, if proven true, will give rise to a claim covered by the policy.

As such, many small businesses want to seek out liability insurance with the broadest level of protection. Many times, these small businesses will choose comprehensive general liability (“CGL”) insurance, which is meant to shield the insured party against damages or judgments that arise from damage to, destruction, or loss of property, as well as bodily injury or death of a person who is not the insured.

Typical coverages in CGL insurance policies:  

  • Owners’, landlords’, and tenants’ insurance;
  • Manufacturers’ and contractors’ insurance;
  • Contractual liability insurance;
  • Owners’ and contractors’ protective liability insurance;
  • Advertising insurance;
  • Products and completed operations liability insurance; and
  • Personal injury liability exposure insurance.

However, as mentioned in our companion post , liability insurance policies have policy limits that set the amount of coverage. On top of that, many liability policies refuse to cover specific situations through the use of exclusions to narrow the scope of coverage. Exclusions are numerous and can be customized based on individual insurance plans. However, many exclusions can be classified as a) intentional torts; b) risks for which CGL insurance is not appropriate; c) risks that could result in or involve substantial liability; or d) risks that implicate a moral hazard, such as the insured’s fraud or wrongful conduct.

So, while many small businesses think they have secured comprehensive, far-reaching protection against liability, the truth is that CGL insurance isn’t as powerful as one might assume.

Typical exclusions to CGL insurance policies: 

  • Negligent, expected, or intended injury
  • Bodily injuries suffered by employees in the course of their employment for the insured (i.e. workers’ compensation claims)
  • Employers liability
  • Contractual liability arising from disputes with clients or third parties
  • Pollution liability
  • Liquor liability under state law
  • Property liability related to the damage to property in the care, custody, or control of the insured;
  • Property liability relating to new construction, demolition, or alterations changing the size or location of existing buildings and structures;
  • Protections for vehicles
  • Damage to work or products
  • Liability related to the recall of products
  • Data loss

A CGL insurance policy is still a good starting point for a new business and offers important protection, but businesses also need policies specifically suited to their needs, such as Workers’ Compensation, Commercial Auto Insurance, Data Breach Insurance, and Professional Liability Insurance. These additional policies will give protect your business with plans targeted to your individual needs, leaving you free to sustain and grow your business.

Now that you have the facts, it’s time to protect your business’s liability from all angles. What other concerns do you have about your business insurance coverage? Want a second pair of eyes on your policy? Schedule an appointment and let us help you protect yourself and your business from coverage gaps--before a lawsuit pushes the issue for you.

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