Three Liability Insurance Myths to Be Wary Of
Nearly all business owners need to carry general liability insurance, because no matter what you do, there are risks present that could cause harm to others (no matter how hard you work to keep people safe). This benefit helps you address these third-party losses in ways that are mutually beneficial for all involved parties.
Still, many businesses don’t understand the importance of this coverage. Policyholders might also not realize some of the limitations of this coverage, and at times might be tempted to believe myths about how general liability coverage works. Keep these common misconceptions in mind when getting your coverage.
Myth 1: BOPs are All the Coverage You Need
Many small business owners get their critical coverage through a business owners policy (BOP). The BOP contains numerous essential commercial insurance benefits in one place, including liability coverage.
However, BOPs only offer general liability insurance as a baseline of coverage. Therefore, to assume that your BOP contains all the liability coverage you need is incorrect. Often, you will need to augment the coverage within a BOP, including by buying a commercial umbrella liability plan. This umbrella policy offers additional benefits that you can claim once a claim exceeds the financial limit of the CGL benefit within the BOP itself.
Myth 2: CGL Benefits Cover All Commercial Liabilities
A CGL policy is not all-encompassing. It generally only covers common liabilities—property damage, bodily injuries, personal injuries, product injuries—that might occur in any business. It does not cover more specific risks like cyber liabilities, directors & officers (D&O) liabilities or industry-specific risks.
Furthermore, neither employee liabilities nor the business’s own property will be covered by this benefit. However, this coverage is available separately and you will need to augment your CGL plan appropriately.
Myth 3: Your Small Business Doesn’t Have Enough Liabilities to Need Coverage
Some small business owners mistakenly think that they don’t have to buy liability coverage because they don’t pose enough of a risk to customers to merit buying coverage. This is categorically incorrect.
The bottom line is that you never know when someone might experience a property loss or bodily injury when using one of your products, letting you handle their property or simply visiting your business. When they do, their losses could be substantial, and if they blame your business then you might have to pay them for their trouble. This financial blow alone could be significant, and if it arises as part of a lawsuit by the affected party, it could be insurmountable for your business.
Therefore, work with your insurance agent to learn what your CGL benefits cover on a base level. Afterwards, the agent can help you determine precisely where your additional coverage needs lie, and what you need to do to increase your benefits.