What Isn't Covered By Business Insurance?

No insurance policy covers everything. Here are a few things standard insurance policies don't cover.

  • Natural disasters / floods. A standard Property Insurance policy doesn't cover disasters and other major weather events, but you may be able to customize a policy to have coverage you want. Businesses frequently add "riders" to their policies to buy coverage for a specific type of property damage (e.g., hail damage or floods).
  • Auto accidents. Standard General Liability policies cover injuries and property damage your business may cause, but they don't cover auto-related injuries and accidents (if this coverage is important, you can add auto coverage to a General Liability Insurance policy). This is especially significant because many Personal Auto policies don't cover you when you drive your car for work. If you get into an accident while driving to a client's workplace to oversee an installation, your Personal Auto Insurance might not cover your legal, medical, and auto damage expenses.
  • Intentional acts. If you or an employee intentionally tries to damage property or harm someone, your insurance won't cover it.
  • Fraudulent acts or intentional errors. Professionally Liability Insurance (E&O Insurance) won't cover any fraudulent or intentional mistakes your business makes. (However, Fidelity Bond coverage does cover fraud and theft in certain situations.)
  • Damage to a client's property stored or serviced at your office. Let's say that a hard drive fails in a client's laptop. You take it back to your office to try to retrieve the data on it. What would happen if a fire burned down your office? Or a burglar broke in and stole some of your property, including the client's laptop?

In these situations, your Property Insurance would cover not only your property but also your client's property.

Next: The Risks of Starting and Stopping Coverage

70% of businesses raise prices or cut hiring when sued