Common Myths About General Liability Insurance

Many business owners make the mistake of underinsuring themselves, causing them to waste money on insufficient coverage. Conversely, some find that they’re overinsured because of greedy agents who took advantage of their lack of knowledge. 

So for insurance to work, you need just the right amount of coverage. However, there are many myths around general liability insurance that business owners quickly believe because it seems convenient. This article will discuss some of the myths and how to fill the holes in your current policy.

Myth #1: General Liability Covers All Risk

General liability coverage may cover some of the damages you are responsible for paying to others. However, it may not cover damages to your business caused by yourself or others. 

To ensure you have enough insurance, ask for more specific details about incidents covered in your policy. Then, make sure you add or reduce the coverage you get in certain areas depending on the risk level.

Myth #2: General Liability = Workers’ Compensation

General liability is not the same as workers’ compensation insurance, and it may not cover injuries that occur in your place of business. Additionally, many people think that workers’ compensation is unnecessary for office settings where accidents are still bound to happen. 

For example, you could have employees who trip over things or slip on a coffee spill that wasn’t properly cleaned. While these scenarios may be unlikely, you don’t want to risk the financial burden.

Myth #3: Your Personal Auto Policy Will Cover Accidents on the Job

Most auto insurance policies may not cover work-related claims. For example, if you’re commuting to work and get into an accident, that’s likely a covered loss. On the other hand, if you crash while delivering goods to a customer with your car, that’s probably not covered. To fix this, you may need a commercial auto policy.

Myth #4: Small Businesses Carry Less Risk

This may be the most dangerous myth since many small businesses underinsure themselves, thinking they carry little to no risk. However, small companies can attract more trouble because they lack the security to protect themselves. So it’s critical to recognize that criminals might easily spot your weakness and attack, stealing customer data or money. Plus, putting customer information at risk can lead to more lawsuits that could quickly bankrupt you.

Myth #5: Insurance is not Worth the Cost

Thinking it won’t happen to you is like holding your entire business over the toilet. The minute a customer injures themselves in your building or sues, you may have flushed your hard work down the drain. Putting yourself at risk for an irrecoverable loss is never a good idea, especially if you’re running a small business. 

Insurance may not be worth the cost when you have too much or too little coverage. So finding a reliable and trustworthy company for general liability insurance coverage is necessary for proper protection that is worth every penny. 

Myth #6: General Liability Covers Mistakes or Malpractice

Unless errors and omissions (or malpractice) coverage are included in your policy, you could still be responsible for legal fees you incur due to your mistakes. For instance, if you’re a doctor and a patient files a malpractice lawsuit against you, the general liability insurance might not cover it. You must speak with your insurance agent to get the correct coverage for any possible risk you take on as a business owner, even the ones you think won’t happen to you. 

Myth #7: General Liability Covers Employee Lawsuits

In the same way, general liability doesn’t necessarily cover workers’ compensation, it might not cover employee disputes that become a legal problem. Again, your general liability coverage is not ultimate protection against any risk you incur being a business owner. So you need to speak with your agent to determine the amount of coverage you need depending on your industry and risk level.

Myth #8: A Covered Loss = No Money Spent Out of Pocket

If your policy covers $100,000 of a loss that costs $200,000, you’re still responsible for the other half. If you want to pay less out of pocket, you need to buy more coverage. To determine how much you need, think about how much of a financial burden you can handle without going bankrupt. In addition, you’ll need to determine how much you can afford to pay in premiums. It can be a balancing act, but you can get the right amount of coverage at an affordable price. 


You’ve invested so much effort, time, and money into your business, and your hard work deserves to be protected. However, you shouldn’t waste money on insurance that won’t cover every risk, especially if you believe any of the common myths listed in this article. So it’s important to discuss your coverage in detail with your agent, compare prices between companies, and seek the advice of a lawyer to confirm that you have adequate protection.