Most business owners understand that they need to carry some type of insurance to protect their operations and assets. One of the most commonly requested types of coverage is General Liability insurance (aka the CGL policy). But, is general liability insurance enough? In simplistic terms, general liability provides coverage for bodily injury and property damage that are caused by the insured’s negligence. This can include claims resulting from the insured’s operations, such as a physical place of business, products manufactured, sold or built, or the services provided to customers. General liability also typically provides some coverage for “personal injury” claims that can include allegations of slander, libel, violation of privacy, advertisement and copyright infringement. The coverage provided by general liability handles claims of bodily injury and property damage very well. It is not, however, all-encompassing and there are many possible exposures faced by business owners that require specialized liability insurance, such as the types listed below.
Claims involving the release of or exposure to “pollutants”, whether on the insured’s premises or a location in which the insured is (or was) working are excluded from coverage under the CGL form. The verbiage of this exclusion is very broad and includes pollutants in liquid, gas and solid form. Any business that has a possible exposure to pollutants should consider a pollution liability policy. Contractors, manufacturers, auto repair, gas stations and pest exterminators especially have a high potential exposure to a pollution liability claim.
Cyber Liability and Data Breach
Any business that keeps personal information about customers in paper or digital form has a potential exposure to a data breach claim. This data can be something as simple as names and addresses or potentially more troubling such as SSN’s, credit card and bank account information. The cost of notify customers of a data breach and dealing with the related costs, including lawsuits, can reach into the thousands very quickly. Cyber Liability insurance provides coverage for both 1st and 3rd party expenses and is surprisingly affordable.
Employment Practices Liability
One of the most common claims against businesses today is employee allegations of improper hiring, firing, discrimination or harassment. Even a claim that is without merit can cost thousands of dollars to successfully defend. Legitimate claims of improper employment practices typically cost around $40,000 to settle out of court and over $200,000 in court. Employment Practices Liability Insurance (aka EPLI) can be added to some types of business insurance policies, or can be purchased separately. It is important to note that this coverage is NEVER included in a general liability policy.
Workers Compensation Insurance
Every State in the US requires that employers provide coverage to their injured employees. General liability insurance specifically excludes “bodily injury” to employees. Workers compensation insurance provides coverage for employee injuries and disease and provides protection to employers under “exclusive remedy” laws.
Claims of bodily injury, property damage or financial loss caused by “professional services” are excluded under the CGL policy. Examples of this include medical malpractice, beauty salons, and other personal care services, attorneys, contractors, engineers, architects, interior designers, financial planners and other professionals that give advice. Professional liability insurance provides coverage for claims that result from defective work, plans, designs or services.
Beyond General Liability
General liability insurance, as good as it is, does not contemplate every possible liability scenario faced by a business owner. We recommend you contact our office for a review of your business insurance portfolio and let us help you identify possible scenarios or exposures you might face, that are not covered by general liability insurance alone.