What does my general liability policy not cover?

What does my general liability policy not cover?

General liability covers harm your business causes to other people and their property. It does not cover damage to your own work or your own product, injuries to your own employees, anything involving a vehicle, pollution, electronic data, or the cost of recalling something. Each of those needs a separate policy, and most businesses own fewer of them than they think.

What does general liability actually cover?

It helps to start here, because the exclusions make more sense against it.

A commercial general liability policy responds to three things:

• Bodily injury to someone who isn't your employee

• Property damage to something you don't own

• Personal and advertising injury: libel, slander and a short list of similar offenses

A customer slips in your lobby. Your crew cracks a window at a client's building. Your sign falls onto a parked car. That is the policy working.

All three have something in common: the harm is to someone else, and it's physical. That one idea explains most of what follows.

Which exclusions surprise businesses most?

Does it cover damage to my own work or product?

No. This is the biggest gap, and it hits contractors and manufacturers hardest.

The policy excludes damage to "your product" arising out of the product itself, and damage to "your work" once the job is finished.

In practice: if you install a roof and it leaks, general liability may pay for the water damage to the ceiling, carpet and furniture below, because that's property you don't own. It won't pay to redo the roof. The defective work itself is a business cost, not an insured loss.

Businesses find this out at the worst moment, because the whole claim feels like one event. The policy splits it in two: your work, and everything your work damaged.

One important exception that most articles miss. The "your work" exclusion doesn't apply if the damaged work, or the work that caused the damage, was done by a subcontractor. A general contractor whose sub installed the faulty roof may have coverage that a contractor who did the work itself would not. If you sub out work, this is worth a conversation. It's one of the few places the policy works in your favor, and it depends on how your contracts are set up.

Does it cover my employees?

No. The policy excludes obligations under workers' compensation laws and, separately, injuries to employees on the job, including injuries to an employee's relatives arising from the same event.

So an injured employee is a workers' compensation matter, not a general liability one. There's no overlap and no fallback. A business that's required to carry workers' comp and doesn't has no general liability safety net underneath it.

Does it cover accidents involving a vehicle?

No. Autos, aircraft and watercraft are excluded, whether the claim involves owning them, maintaining them, using them or lending them to someone else.

This catches businesses that own no vehicles at all. If an employee causes an accident while running a work errand in their own car, general liability doesn't respond. That's hired and non-owned auto coverage, which is part of commercial auto and has to be bought separately.

Does it cover bad advice?

No, and the reason is different from the others.

Professional liability usually falls outside the policy not because of an exclusion but because of what the policy covers in the first place. General liability covers bodily injury and property damage. A claim that your advice cost a client money is neither. It's purely a financial loss, and the policy was never built to reach it. Many carriers also add a professional services exclusion to make it explicit.

For an accountant, consultant, engineer, architect or agency, errors and omissions coverage isn't an add-on to general liability. It covers an entirely different kind of claim.

Does it cover pollution, lost data or a product recall?

No. These three exclusions are broader than their names suggest.

Pollution is defined broadly: the discharge, dispersal, seepage, migration or escape of pollutants at your premises, at a waste site, or during your operations. It reaches well beyond chemical spills. Manufacturers using solvents or coatings, and contractors disturbing existing materials, are both closer to it than they expect.

Electronic data. Loss of, damage to, corruption of, or inability to access electronic data is excluded. General liability is not a backup for a cyber attack.

Product recall. The cost of pulling a product off the market, including the logistics, the customer notices and the destroyed inventory, is excluded. General liability pays for harm your product caused, not for getting it back.

Does it cover property in my care?

Usually not. Apart from your own premises, the policy excludes damage to personal property in your care, custody or control.

For a contractor working inside a client's building, this is a real issue. The equipment you're installing, materials staged on site, the customer's furniture you moved to get to something: those fall into a different category of risk, usually covered by an installation floater or inland marine coverage rather than general liability.

Which gap matters most in my industry?

Across the businesses we work with in the Carolinas, the gap is fairly predictable:

• Contractors: your own work. Almost always the first surprise.

• Manufacturers: your own product, and recalls.

• Restaurants: employee injuries, and delivery drivers in their own cars.

• Professional services: the advice itself, which was never covered.

• Churches and nonprofits: volunteer drivers, and abuse and molestation claims. The standard policy doesn't exclude these on its own, but most carriers add an abuse or molestation exclusion, so coverage usually has to be bought back separately.

• Property and apartment owners: damage to buildings you own, which is a property insurance question rather than a liability one.

What should I do about it?

You don't need to read your policy cover to cover. Two questions get you most of the way:

What would hurt most if it happened? Then ask whether general liability would respond. If the answer involves your own work, your own people, a vehicle, advice, data or pollution, it won't, and you want to know which policy does.

What do your contracts require? Customers and landlords often require coverage that general liability doesn't include. A certificate showing general liability can tick the box while leaving the actual obligation uninsured.

H.B. Cantrell & Co. has been helping businesses across North and South Carolina build complete commercial insurance programs for over 50 years, from our office on East 7th Street in Charlotte. We represent more than 50 carriers, which means the gaps above can usually be closed without changing everything else.

If you want to know what your general liability policy would and wouldn't do for your business, call 704-954-9000. A person picks up.

Exclusions described from the ISO Commercial General Liability Coverage Form (CG 00 01). Carrier forms and endorsements vary, and some narrow or broaden what is described here. This article is general information, not advice about your specific policy.