Small business insurance policies help business owners and self-employed professionals reduce risk. They also provide financial support if they suffer damage or loss. But an insurance policy can’t cover you for everything, which is why insurance providers have Business Insurance exclusions written into a policy. The business insurance exclusions in your policy outline what damages or losses your insurance provider will not cover. Let’s learn more about some of the more common Business Insurance exclusions, and what you don’t have coverage for.
What classifies as a Business Insurance exclusion?
An exclusion is a stipulation within an insurance policy that specifies which loss types or properties are not covered in the event of a loss. A business insurance exclusion is a provision that removes your coverage for certain risks, hazards, or events and outlines what is not covered by your policy. They are designed to help keep the price of premiums affordable, otherwise, the price will be prohibitively high.
Insurance providers have Business Insurance exclusions in a policy. Simply put, they can’t pay every claim regardless of what it is or how it happens. If that were the case, your insurance provider would be out of business rather quickly. Some examples of why an insurance provider may exclude something from a policy are:
- Too much risk. If your commercial property is on a floodplain, an insurance provider may decline to provide you with overland flood protection.
- The loss or damage is avoidable. It’s your responsibility to upkeep your property or equipment. How? By taking preventative and proactive steps to avoid unnecessary damage or loss.
- It’s impossible to price the risk. A policy may exclude damage or loss resulting from a hostile act. This includes war or terrorism since it’s impossible to calculate potential losses or the timeframe in which such things may occur.
- The loss or damage is covered elsewhere. Commercial property insurance does not cover your business vehicles because commercial auto insurance will cover them.
What are some common Business Insurance exclusions?
When looking over your business insurance policy, you will notice Business Insurance exclusions after your coverage details. However, there are some common exclusions in a policy written within your coverage details:
- Catastrophes. While damages from extreme weather may be an inclusion, risks such as earthquakes, floods, storm surges, and wars, are not. Furthermore, a small business may have flood damage coverage in a Commercial Property policy.
- Intentional or criminal actions: Damage done intentionally to property or an item by the insured, like igniting a fire. Or, criminal activity, such as fraud by a business owner or employee.
- Preventative maintenance: Commercial property and equipment breakdown insurance are designed to cover the cost of loss to your property resulting from unforeseen events. However, physical damage to your property due to wear and tear or failure to maintain an issue (ex. burst pipe) is usually excluded.
- Liquor liability: If you own a restaurant or cafe that sells alcoholic beverages, your general liability policy does not include coverage for claims arising from one of your intoxicated patrons. In this instance, you need to add Liquor Liability coverage to your policy.
- Employee injuries: Your full- or part-time employees who are injured on the job are typically covered by workers’ compensation insurance. This is a typical offering through the respective workers’ compensation board in your province.
Other types of exclusions
- Professional Services: General liability policies tend not to provide coverage for professional services, like consulting or legal. So, if your business provides advice or services such as these, additional E&O coverage may be a requirement. This will help guard against claims concerning professional negligence.
- Pollution Claims: Many general liability policies don’t cover pollution claims that result from something as simple as cleaning solutions for your business. As a result, this is crucial if your company handles hazardous materials or participates in activities that might damage it. Hence why this will likely be a business insurance exclusion.
- Product Recall: Certain insurance policies don’t cover product recalls, which can be financially catastrophic for businesses that produce or sell them. It’s crucial that businesses closely review their terms of policy coverage in this area, and consider purchasing additional coverage as needed.
Insurance companies always consider the type of business you own when determining your premium. isure designs business insurance policies to ensure the protection of business owners, as well as their businesses! Ensuring that the appropriate coverage is included, as well as identifying business insurance exclusions that fit your needs is what we do best. We are customer-solution-based and committed to understanding your business. Contact us for a no-obligation, free commercial business insurance quote.
Insurance prices can always vary from small, medium and large Read more
While a liquor licence can be very profitable for restaurants, there Read more
isure has you covered when it comes to everything you Read more
