Common Misconceptions About General Liability Insurance
General liability insurance is a must-have for most businesses, but it’s not always well understood. Many business owners assume it covers everything or that having a policy means they’re fully protected. Unfortunately, those assumptions can lead to gaps that only become clear when it’s too late. Understanding what general liability does– and doesn’t– cover helps you make smarter choices and avoid costly surprises.
You’ll Likely Need More Than One Policy
Most businesses need more than just general liability. Depending on your work, you may need additional protection like cyber liability, professional liability, or umbrella coverage. Business owner’s insurance is a starting point— but not a complete strategy.
It’s Not a Catch-All Policy
General liability covers third-party claims like injuries, property damage, and advertising harm. But it doesn’t cover everything. It won’t protect you from employee injuries, damage to your property, or mistakes in your professional services. If you rely on this policy alone, you may find yourself unprotected in key areas.
Not Every Claim Will Be Covered
Just because you have a policy doesn’t mean every incident results in a payout. If a claim falls outside your policy’s terms– like something caused intentionally or tied to a contract dispute– it likely won’t be covered. Knowing what’s excluded is just as important as knowing what’s included.
It Doesn’t Cover Employee Injuries
A common misconception is that general liability also covers your employees. It doesn’t. Workplace injuries require workers’ compensation insurance, which is legally required in most states. Without it, you could face lawsuits, fines, and uncovered medical costs.
Professional Mistakes Aren’t Included
If your business provides advice or services, general liability won’t protect you from claims of errors or poor performance. That’s what professional liability insurance is for. Without it, a client alleging a costly mistake could put your business at risk.
Policy Limits Matter
General liability policies come with financial limits– both per claim and overall. If you’re hit with a large lawsuit or multiple claims in one year, your coverage could run out. As your business grows, it’s important to review those limits and adjust them to match your risk level.
Home-Based Businesses Still Need Coverage
Running a business from home? Don’t count on your homeowner’s policy to protect you. Once business activities are involved– like a client visit or damage to customer property– homeowners insurance won’t apply. General liability tailored for home-based businesses fills this gap.
Certificates of Insurance Don’t Tell the Full Story
Having a certificate of insurance (COI) may be enough to get a contract, but it doesn’t show the full scope of your coverage. It only proves a policy exists– it doesn’t confirm what’s covered or how much. Make sure your COI aligns with your obligations.
General liability insurance is vital, but it’s not enough on its own. Understanding its limitations– and pairing it with other coverage– helps ensure your business is protected where it counts. An independent insurance agent can help tailor a plan that fits your operations and gives you real peace of mind.