General liability insurance is supposed to be your business's safety net, but many business owners are unknowingly setting themselves up for disaster. Whether you're a contractor, retailer, or service provider, these common mistakes could leave you exposed when you need protection most. Let's dive into the seven biggest general liability insurance mistakes business owners make: and more importantly, how to fix them. Mistake #1: Assuming General Liability Covers Everything This is the granddaddy of all insurance mistakes. Too many business owners think general liability insurance is like a magic umbrella that protects against every possible risk. It's not. General liability typically covers: • Third-party bodily injury claims • Property damage to others • Personal and advertising injury claims • Legal defense costs for covered claims But it doesn't cover professional errors, employee injuries, cyber attacks, or damage to your own property. If you're a consultant who gives bad advice, an employee gets hurt on the job, or hackers steal customer data, general liability won't help you. How to Fix It: Get crystal clear on what your policy actually covers. Read through your declarations page and policy documents. If you spot gaps, consider additional policies like professional liability, workers' compensation, or cyber liability insurance. Don't assume: ask your agent specific questions about your coverage. Mistake #2: Buying Too Little Coverage Many businesses go with the minimum coverage required by their clients or state regulations. While this might seem like smart budgeting, it's actually a recipe for financial disaster. If you carry $1 million in coverage but face a $2 million lawsuit, guess where that extra million comes from? Your personal assets, business savings, and future earnings. How to Fix It: Think about your worst-case scenario. What's the most expensive lawsuit you could reasonably face? Consider your industry's typical settlement amounts. Many businesses need $2-5 million in coverage, not the bare minimum. The extra cost for higher limits is usually much smaller than you'd expect. Mistake #3: Ignoring Policy Exclusions Every insurance policy has exclusions: specific situations where you're not covered. The problem? Most business owners never read them until it's too late. Common exclusions include: • Intentional acts • Pollution • Professional services • Property in your care, custody, or control • Employment-related claims How to Fix It: Schedule a sit-down meeting with your insurance agent to review every exclusion in your policy. Ask for real-world examples of how each exclusion might affect your business. If an exclusion creates a significant gap in your coverage, explore options to fill it with additional insurance or policy endorsements. Mistake #4: Choosing Based on Price Alone Shopping for insurance like you're buying paper towels is a mistake that can cost you everything. The cheapest policy often provides the least coverage when you need it most. Low-cost policies might have: • Higher deductibles • More exclusions • Weaker coverage language • Less reliable claims service • Financially unstable insurance companies How to Fix It: Compare policies based on coverage quality, not just price. Look at the insurance company's financial ratings (aim for A-rated insurers), read policy language carefully, and consider the insurer's claims-paying reputation. Sometimes paying 20% more upfront can save you hundreds of thousands later. Mistake #5: Never Updating Your Policy Your business isn't the same as it was five years ago: so why is your insurance? As your business grows, changes locations, adds employees, or expands services, your insurance needs change too. Many businesses discover they're underinsured only when filing a claim. By then, it's too late. How to Fix It: Review your policy annually, and immediately after any major business changes. Update your coverage when you: • Hire new employees • Expand to new locations • Launch new products or services • Take on larger contracts • Change your business structure Set a calendar reminder to review your insurance every year, just like you would for tax planning. Mistake #6: Not Understanding Aggregate Limits Most general liability policies have two types of limits: per-occurrence and aggregate. The aggregate limit is the maximum your insurance company will pay for all claims during your policy period, regardless of how many separate incidents occur. If you have a $2 million aggregate limit and face three separate $800,000 claims in one year, you'll be personally responsible for the $400,000 that exceeds your aggregate limit. How to Fix It: Make sure you understand both your per-occurrence and aggregate limits. Consider whether your aggregate limit is sufficient based on your industry's claim frequency. Some businesses benefit from higher aggregate limits or policies that restore the aggregate limit after claims. Mistake #7: Forgetting About Additional Insureds If you work with other businesses, they probably require you to add them as "additional insureds" on your policy. This means your insurance extends to cover them for certain claims related to your work. The problem? Many business owners don't properly add additional insureds, or they use outdated forms that don't provide adequate coverage. When a claim happens, everyone assumes they're covered: until they find out they're not. How to Fix It: Keep a detailed list of all contracts requiring additional insured status. Work with your agent to ensure everyone is properly added using current ISO forms. Review this list regularly and remove additional insureds when contracts end to avoid unnecessary coverage. Getting Your General Liability Insurance Right These seven mistakes are costing business owners millions in uncovered losses every year. The good news? They're all completely preventable with proper planning and regular reviews. Don't wait until you're facing a lawsuit to discover your insurance gaps. Take time now to review your current policy, understand your coverage, and make necessary improvements. If you're not sure where to start or want to review your current coverage, contact our team for a comprehensive insurance review. We'll help you identify potential gaps and ensure your business is properly protected. Remember: the goal isn't to have the cheapest insurance: it's to have the right insurance when you need it most.