If you are the owner of a construction firm, you have commercial general liability insurance that covers damages due to accidents or injuries caused by you or your employees. Typically, these policies cover on-the-job incidents, such as property damage due to faulty wiring or damage to equipment due to a collision or falling debris. Accidental injuries typically are covered as well.
Nevertheless, simply having commercial liability insurance does not protect your business from liability for every incident. Numerous conditions and exclusions may apply. These include:
- Financial responsibility: In order for business liability insurance to apply to an incident, the contractor must be financially responsible.This applies to damages caused by alleged acts of negligence (civil torts), such as when a contractor fails to ensure his workers are properly trained to perform the tasks they are assigned.
- Occurrences: Commercial general liability insurance covers “occurrences.” This includes incidents such as a crane toppling over and damaging a building, or damages caused by repeated or continued exposure, such as water gradually leaking into the walls of a home. Business liability insurance typically excludes intentional, willful or malicious acts.
- Tangible property damage: Most commercial general liability insurance policies define property as “tangible property,” such as a building or equipment. Thus, if an accident causes damage to a computer, the computer itself would be covered by the liability insurance, but the loss of the data on the hard drive would not. Tangible property damage typically includes loss of use, such as the cost of renting office space or a car.
- Faulty workmanship: Many commercial liability insurance policies do not cover faulty workmanship, since this is viewed as an “intentional” act. However, insurers may cover occurs as a result of flawed workmanship if the damage was accidental.
For example, if a contractor installs a ceiling fan improperly and it falls down, the cost of replacing the ceiling fan would not be covered by his business liability insurance because faulty workmanship is not an accident. However, if the fan falls on an antique table and damages it, the cost of replacing the table would be covered because that damage was not a foreseeable consequence of the contractor’s faulty work; it was an accident.
Knowing what your commercial general liability insurance covers is critical to protecting your business. If you have questions about your coverage, make an appointment with our commercial and business insurance experts to discuss your concerns. Call our office at 516-292-3780 or schedule a consultation today.