29 Feb Understanding the Fine Print: Business Insurance Policy Exclusions

Did you know that your business insurance policies contain some exclusions? The items listed in these exclusions aren’t covered by the policy, often leaving you to pay for them out of pocket. Insurance exclusions are usually embedded in the fine print of your policy, which is something that many people overlook, only to be surprised when their insurance refuses to cover something listed in them. Rather than being caught unaware, it’s important to know what these exclusions are and how they apply to your business.

Common Business Insurance Exclusions

Many people realize that acts of God, like earthquakes, flooding, and large storms that damage your property are a common insurance exclusion. That’s why special policies are sold for those who are located in hurricane, earthquake, or flood-prone regions. However, business policy exclusions often go beyond that to include:

• Things That Are Covered Elsewhere – If you have multiple business insurance policies, then issues covered by one of them usually aren’t covered by the others. This prevents you from double-dipping on your policies and receiving payouts from multiple ones for the same incident. For example, if you have flood insurance on your building, then your property insurance won’t cover flooding (which it wouldn’t anyway, making flood insurance a necessity if you’re in a flood zone.)
• Purposeful Acts – Things that are done on purpose aren’t covered by most policies. If you get angry and throw something at the wall, making a dent in it, your business property insurance won’t cover the repairs to that wall. This prevents your insurance from covering things that are done in anger, keeping you from filing unnecessary claims every time something purposefully happens.
• Common Sense Actions – This includes incidents that are known to be easy to control, or in this case, prevent. If your insurance company decides that the incident could have been avoided if you had done your due diligence and maintenance, then they won’t cover it. A good example of this is a roof that caved in due to having several feet of snow on it. You had the ability to remove the snow from your flat roof, knowing that the weight of the snow could weaken the roof, but you chose not to.
• General Maintenance – The equipment that your business uses every day needs to be properly maintained. If you choose not to do so, then your insurance may refuse to pay for replacement costs. In addition, unless you have a policy covering your equipment, like equipment breakdown insurance, your insurance won’t cover the cost of repairs even if you maintained everything properly. This generally falls under the “wear and tear” clause of your insurance policies.

Do You Need Help Understanding Your Business Policy?

If you have questions about the exclusions in your business insurance policies or just aren’t sure what’s covered and what isn’t, then reach out to a Spivey Insurance agent. Our highly trained and knowledgeable employees will be able to answer your questions and help you find the right policies to protect your livelihood.