Running a business is inherently risky, but having the right insurance coverage can protect your enterprise when unexpected challenges arise. Insurance serves as a financial safety net, protecting your operations, employees, and assets. However, many business owners only discover the gaps in their coverage when it’s too late. As commercial and bad faith insurance attorneys, we have observed how inadequate coverage can devastate businesses.
The Basics: Commercial General Liability (CGL) Coverage
At its core, Commercial General Liability (CGL) insurance provides fundamental protection against a wide range of potential liabilities. This includes claims arising from bodily injury, property damage, and personal or advertising injury caused by your business operations.
Here are the key elements typically included in a standard CGL policy:
- Bodily Injury and Property Damage Liability: Coverage for claims if your business activities injure someone or damage their property.
- Personal and Advertising Injury: Protection against claims such as defamation, copyright infringement in advertising, or invasion of privacy.
- Medical Payments: Coverage for medical expenses if someone is injured on your premises, regardless of fault.
While these coverages offer foundational protection, a basic CGL policy is rarely enough to cover the full spectrum of risks businesses face today.
Beyond the Basics: Supplementary Coverages to Consider
Every business is unique, and your insurance coverage should reflect that. Consider these supplementary policies to ensure comprehensive protection:
- Professional Liability Insurance (Errors and Omissions)
- If your business provides advice, expertise, or professional services, this coverage protects against claims of negligence or inadequate work.
- Product Liability Insurance
- For businesses that manufacture or sell products, this coverage protects against claims related to defective products that cause harm.
- Cyber Liability Insurance
- In today’s digital age, cyberattacks and data breaches are significant threats. Cyber liability insurance can cover expenses related to these incidents, including legal fees and regulatory fines.
- Business Interruption Insurance
- If a disaster temporarily halts your operations, this coverage helps cover lost income and operating expenses during downtime.
- Employment Practices Liability Insurance (EPLI)
- EPLI protects against claims made by employees for issues like wrongful termination, discrimination, or harassment.
- Umbrella Insurance
- This policy provides additional liability coverage that kicks in when the limits of your primary policies are exhausted.
Combining insurance coverage can help create layers of protection for your business against unexpected financial losses.
Common Pitfalls to Avoid
When evaluating your insurance coverage, watch out for these common mistakes that could leave your business vulnerable:
- Over-Reliance on Basic Coverage
- Assuming CGL policy covers all risks
- Missing industry-specific protections
- Overlooking supplementary coverage needs
- Underestimating Risk
- Assuming cyberattacks won’t happen
- Believing basic coverage is sufficient
- Ignoring industry-specific risks
- Overlooking Policy Exclusions
- Not reviewing exclusion sections
- Missing crucial coverage gaps
- Failing to understand limitations
- Static Coverage
- Not updating as the business grows
- Keeping the same limits for years
- Ignoring new risk categories
- Inadequate Coverage Updates
- Not adjusting policies as business expands
- Keeping outdated coverage types
- Missing new operational risks
- Not Reviewing Policy Limits
- Maintaining old coverage amounts
- Underestimating current claim costs
- Overlooking inflation in settlement values
When to Seek Legal Guidance
Commercial insurance policies often contain complex language and provisions that can significantly impact coverage. An attorney can help you understand:
- Policy terms and conditions
- Coverage limitations and exclusions
- Industry-specific considerations
- Claims reporting requirements
- Coverage adequacy for your business
Schedule a review of your business insurance policies to better understand your coverage and identify potential gaps. Attorneys experienced in complex commercial insurance and bad faith cases understand how proactively addressing insurance coverage can save businesses from catastrophic losses. Business owners should not leave their future to chance.
Don’t Wait for a Crisis to Discover Your Insurance Gaps.
Business owners who are unsure whether their current insurance coverage is adequate or who are facing a claim against their insurance company should consult an experienced attorney. With the right guidance, businesses can ensure they are fully protected and positioned for long-term success. Contact Levin Sitcoff today for assistance.
