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The Five Most Common Exclusions on a General Liability Policy

The Five Most Common Exclusions on a General Liability Policy

Most general liability policies cover accidental bodily injury or property damage that you cause to someone else, but not all of them cover every accident scenario.

Knowing what doesn’t get covered on a policy can save you from costly mistakes in the future. Here are five of the most common exclusions found on general liability policies

Intentional Acts

There are five exclusions on the general liability policy. The first exclusion is for intentional acts which includes any injury or damage that is the result of any intentional act committed by or at the direction of an insured person.

The second exclusion is for war, nuclear hazard, and radioactive contamination. Thirdly, there is an exclusion for consequential damages that are not caused by an accident such as economic loss or loss of profits.

Fourthly, there is an exclusion for non-owned autos or other property while they are in your care, custody, or control.

Lastly, there is an exclusion for losses arising out of the rendering of professional services if they are not covered under another insurance contract.

What are the exclusions on general liability policy? The first exclusion is for intentional acts which includes any injury or damage that is the result of any intentional act committed by or at the direction of an insured person.

The second exclusion is for war, nuclear hazard, and radioactive contamination. Thirdly, there is an exclusion for consequential damages that are not caused by an accident such as economic loss or loss of profits.

Fourthly, there is an exclusion for non-owned autos or other property while they are in your care, custody, or control.

Contractual Liability

Some exclusions on general liability policies are for contractual liability, also known as third-party liability. Contractual liability is when an insured party is liable for damages to another party due to the insured’s contract.

This exclusion covers losses arising from a breach of contract. For example, if you accidentally break someone’s window while trying to clean their house and have an agreement with them that you will do so for $20 per hour, then you would be liable for the cost of replacement.

The insurance company may refuse to cover this loss because it is deemed a contractual matter. If you have this exclusion in your policy, you may want to get a different insurance carrier or consider hiring an independent contractor rather than making use of your own skillset.

A risk that falls under this category is when there is a discrepancy between what the client expects and what they receive.

In these cases, there can be legal consequences depending on who you contracted with; however, it may not always require litigation.

Property Damage Caused by You or Your Product

One of the common exclusions you’ll find in general liability policies is property damage caused by the insured or their product.

This can be dangerous for many businesses, especially those that create and market products. The exclusion might seem straightforward, but there are nuances to keep in mind.

For example, if your business creates software and sells it as an end product or as part of another product, then this exclusion won’t apply to you. It will only apply if you sell a physical product like computers or smartphones.

Pollution from Accidental Releases: Some general liability policies also have pollution coverage; however, the most common exclusions for pollution include accidental releases from manufacturing operations.

Keep in mind, if you’re subject to environmental laws like CERCLA, RCRA, or OSHA, then the policy may cover some aspects of these accidents.

Products Defective at the Time They Were Sold: Many general liability policies exclude coverage for products defective at the time they were sold.

If your company manufactures anything with electronics or mechanical components and you haven’t done due diligence testing it before selling it to customers, this could be a big problem when people start reporting defects and suing your company.

Professional Services

It is not uncommon for general liability policies to include exclusions that will not cover certain types of claims. For example, professional services may be excluded.

This exclusion would include any work done by licensed professionals such as lawyers, doctors, and architects.

Even if the service is provided to you and you are the one who initiated it, it may still not be covered under your general liability policy.

If there is an allegation of wrongful conduct in regards to the service provider’s performance, there could also be potential criminal charges brought against them.

If they are found guilty of a crime, this will cause their insurance company to cancel their coverage.

So even if they were providing you with a valuable service at no cost, you can’t rely on your general liability policy for protection since these exclusions exist.

Criminal Acts

General liability insurance covers accidents that happen to people in your area. This includes injuries caused by slips and falls, faulty products, or even someone else’s actions.

There are five common exclusions on general liability policies which will not provide coverage for injuries due to the following – If you are committing crimes of violence against other people, the liability insurer cannot cover those injuries.

For example, if you beat someone up and they need hospital care, this is an exclusion because it is a criminal act. As with criminal acts, war means fighting during time of hostilities where lives may be lost on both sides.

The United States is currently at peace but there have been times when our country was at war, so the next few sentences could apply. War: The United States has only been involved in one war since World War II.

In all wars before World War II (World War I, Spanish American War, Mexican American War), there were some who fought as part of their job while others served voluntarily.

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