Hawaii business owners face serious financial repercussions when faced with bodily injuries and property damage for which their business is legally responsible. To protect against these risks, small business owners require a comprehensive general liability (GL) policy.
Also referred to as business liability insurance, GL policies protect business owners and their organizations from “general” claims arising from their products, services, or operations.
Unfortunately, general liability insurance does not cover all perils and situations. Learn more about GL insurance, what it does not cover, and what additional policies a Hawaii business owner may need to stay protected.
What Is General Liability Insurance?
General liability insurance is a type of small business insurance that covers an organization against accidental injuries and property damage to others. Many GL policies also cover copyright infringement, advertising injury, and reputational harm.
Legal claims may arise due to a business’s products, services, or operations, such as when an improperly made product causes physical harm to a consumer.
Without adequate insurance, a business owner may be forced to pay any damages out of pocket, potentially causing them to go bankrupt. Commercial general liability insurance policies offer varying levels of coverage.
A policy may include coverage for bodily injuries or property damage due to a completed product or service at a different location. It may also cover claims that occur on the business’s physical property during regular business operations.
GL policies can protect small business owners in many situations. For example, if a customer slips and is injured on a recently cleaned floor, general liability insurance may cover any attorney fees and medical expenses resulting from the bodily injury.
What Does General Liability Insurance Not Cover?
While general liability insurance provides small business owners with comprehensive coverage, there are some limitations. Most GL policies do not cover the following:
1. Employee Injuries
General liability insurance does not usually cover accidents that injure employees, only to third parties. To safeguard against employee injuries, Hawaii business owners must carry workers’ compensation insurance.
2. Auto Accidents
Most GL policies exclude commercial vehicles used for business purposes. Businesses that use vehicles for their business should consider carrying commercial auto insurance, which covers business owners and their employees in the event of a vehicle accident.
3. Punitive Damages
Punitive damages refer to payments that a defendant found guilty of wrongdoing is ordered to pay a plaintiff in addition to compensatory damages. General liability insurance does not generally cover punitive damages.
4. Workmanship
Faulty workmanship is a common exclusion in general liability insurance policies. A faulty work claim may arise if a customer alleges that a business owner or employee did a poor job, did not align with the contract’s quality, or did not meet industry standards.
5. Intentional Acts
Bodily injuries or property damage caused intentionally are not covered by general liability insurance. For example, if a customer is seen on camera spilling liquid onto the floor and intentionally slipping and falling, this intentional act may not be covered.
6. Professional Mistakes
Professional errors are generally not covered by GL policies, including mistakes made by business owners or their employees. This means that a policy may not cover bad advice given to a client, resulting in financial losses.
What Additional Policies Does a Small Business Need?
Although general liability insurance is an important policy for Hawaii small business owners, it is not the only policy small businesses need to remain safe. Other essential types of policies include:
Commercial Auto Insurance – With a commercial auto insurance policy, small business owners can cover vehicles used for business purposes, such as trucks, cars, and vans.- Business Owners Policy – A BOP policy offers business owners enhanced general liability and property damage coverage, including coverage for on-site damage to equipment or the property itself.
- Commercial Casualty Insurance – Casualty insurance delivers broad protection that addresses losses from injuries to people or property damage, as well as any legal liabilities that arise from these types of accidents.
- Commercial Property Insurance – Hawaii business owners can use commercial property insurance to help repair or replace lost, stolen, or damaged business property.
- Commercial Umbrella Insurance – Umbrella insurance provides business owners with excess liability beyond the liability limits of other commercial insurance policies.
Get a General Liability Insurance Quote
While many Hawaii business owners know of the many things that general liability insurance covers, it is not as widely known about the things it does not cover. It is important for business owners to understand all aspects of their policies, including any limitations or exclusions.
To learn more about general liability insurance or to request an insurance quote for your Hawaii small business, contact Atlas Insurance Agency today.