When businesses invest in commercial insurance, they expect coverage for a range of risks. While commercial insurance is essential for protecting businesses from financial loss, not everything is covered under a standard policy. Understanding these exclusions can help business owners make informed decisions and secure additional coverage if necessary. Here are some key things that are typically not covered by standard commercial insurance policies.
1. Intentional or Criminal Acts
Insurance policies do not cover damages resulting from illegal activities or intentional harm caused by business owners or employees. Fraud, embezzlement, and other criminal acts are excluded from coverage.
2. Natural Disasters & Catastrophic Events
Many standard commercial policies do not cover certain natural disasters, such as:
- Earthquakes – Requires a separate earthquake insurance policy.
- Floods – Must be covered under a separate flood insurance policy.
- War & Nuclear Events – Typically excluded unless a specific terrorism rider is added.
3. Employee-Related Issues
While commercial insurance may cover general liability, it does not include:
- Workers’ Compensation – Requires a separate workers’ compensation policy for employee injuries.
- Employment Practices Violations – Issues like wrongful termination, discrimination, or harassment are covered under Employment Practices Liability Insurance (EPLI).
4. Cyberattacks & Data Breaches
As cyber threats increase, businesses should know that general commercial insurance policies do not cover cyberattacks, hacking, or data breaches. A separate Cyber Liability Insurance policy is required for protection against digital threats.
5. Professional Errors & Negligence
If a business provides professional services, mistakes or negligence in those services are not covered under a standard policy. Errors & Omissions (E&O) insurance or Professional Liability Insurance is necessary for such protection.
6. Property Wear & Tear
Gradual deterioration of business property due to everyday use is not covered. This includes:
- Routine maintenance and repairs.
- Mold, rust, and corrosion damage.
- Pest infestations.
7. Business Interruption from Uninsured Events
A business’s operations may be disrupted due to various factors, but not all scenarios are covered. Loss of income due to uncovered disasters (such as earthquakes) or supply chain disruptions not included in the policy will require additional coverage.
8. Contractual Liabilities
If a business signs a contract assuming the liability of another party, standard commercial insurance may not cover these obligations unless explicitly stated in the policy.
9. Vehicles Used for Business
Personal auto insurance does not cover vehicles used for business purposes. Businesses must obtain a commercial auto insurance policy to protect company-owned vehicles.
10. Personal Belongings of Employees or Customers
Loss or damage to personal belongings of employees or customers is generally not covered unless explicitly stated in a business policy.
Conclusion
While commercial insurance offers essential protection, understanding exclusions is crucial for comprehensive coverage. Businesses should evaluate their risks and consider additional policies, such as cyber liability, flood insurance, or professional liability coverage. Consulting with an experienced insurance agent can help ensure that your business is adequately protected against unforeseen events.
If you’re unsure whether your business has the right coverage, reach out to an insurance professional to discuss your specific needs.