Commercial Liability Insurance: Why You Need It

When it comes to purchasing commercial liability insurance coverage for your business, it is important to understand what is covered-and what isn’t-on your policy to ensure you don’t experience any unpleasant surprises in the event of a loss.

For example, the owner of Ana’s Flowers, a small shop just starting out with a few employees, was thrilled to land a huge contract to supply decorations for a wedding at a hotel just down the street. In a weird series of six-degrees-of-separation type coincidences, it turned out that the bride was the former girlfriend of one of the employees of Ana’s Flowers. When delivering and setting up the decorations, the ex found himself the brunt of several jokes being made by the groomsmen, who knew of the former relationship. The employee did a slow burn; by the time the groom himself arrived on scene, the employee was spoiling for an altercation. The groom made a snide comment and that was it-the employee stopped decorating and started a physical fist-fight with the groom. Before the two men could be separated, several arrangements were beyond repair and to make matters worse, the hotel had sustained thousands of dollars in damage. While the owner of Ana’s Flowers was aghast to learn of the brawl and embarrassed that her professional reputation was in shreds before it even got established, she was devastated to learn that because the fight was considered an intentional act (along with other actions such as criminal activity and fraudulent behavior) her policy did not cover it or damages sustained from the act. As a result, the flower shop went out of business, unable to pay the thousands of dollars of damage on its own.

What else may be excluded from the policy?

Other things that are excluded from coverage are work-related injuries and illnesses sustained by employees on the job, whether they are working on a full-time, part-time, temporary, or voluntary basis. This includes family members. Rather, workers compensation insurance would provide coverage for those types of expenses. Also excluded: quality of workmanship–e.g., say the flower shop had instead been sued because, say, the elaborate floral design attached to the canopy fell apart and crashed down onto the bride and groom, injuring them. Your professional insurance agent can tell you more about the specifics of covered and excluded items, as well as provide guidance on purchasing coverage for something that your commercial liability insurance coverage does not apply to. Contact your agent today to learn more.

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