Insurance
A Deep Dive Into Business Owners Policy Exclusions to Avoid Surprises
January 27, 2025
| January 23, 2025
Author: KimberleeEdited by: Kimberlee and Reviewed: Kimberlee
Running a business comes with risk. Some of those risks can have you paying for accidents that happen to third parties and can be expensive. Short-term general liability insurance exists to bridge the gap between when you do and don’t need insurance to protect against risks. This article goes deeper into short-term general liability insurance and when you might need it.
Short-term general liability insurance is temporary insurance that you get for a limited period of time. This period of time could be for a specific job that lasts only a few hours or days. For example, you may be a DJ who is required to get general liability insurance for a specific location for a party. Short-term liability insurance exists, so you don’t have to get a full, one-year policy. You can get it just for the time that you need it. It still covers the same third-party losses, such as slip-and-fall accidents, but usually has a price that is much more affordable for the small business owner.
Short-term liability insurance works the same way a standard liability insurance policy works. Note that short-term liability is not available in a business owners policy.
A small business will put a short-term general liability insurance policy in place when it has an operational risk of loss. This means that you likely don’t have a standard location and are being hired for a job over a specified period of time. You buy the policy just for the duration of the job. This type of policy is popular with contractors, DJs, and wedding planners.
The policy has coverage limits, which are the maximum amount that the policy will pay in a claim. While coverage limits may start as low as $100,000, most people opt to have at least $1 million in coverage to protect against major losses. This covers medical expenses or property damage.
The claims process for short-term general liability coverage is the same as for standard annual policies. When someone has a loss, you will provide aid as soon as possible. For example, if someone slips and falls, you will get them medical aid if necessary to treat their injuries. You will call the insurance carrier with the claim information. You’ll need the policy number, the date of loss, details about the accident, and the claimant’s name. The insurance carrier will note all details, work with other parties such as hospitals and doctors, and approve the payments for the loss.
Short-term general liability insurance isn’t for everyone. Many small business owners are better off getting an annual policy that protects their business 24/7. But if you don’t have a static location, short-term insurance may be a good option.
Some industries are more likely to benefit from a short-term general liability insurance policy than others. The popular industries include:
If you don’t have an annual general liability insurance policy and have a special event coming up, you will need to get a short-term general liability insurance policy. This may be required by the location’s leasing contract to limit their liability at your event. Many locations require you to have at least $1 million in liability coverage to cover injuries and property damage.
Let’s take a closer look at the differences between short and long-term general liability insurance.
The cost of any policy depends on the small business’s location, industry, and claims history. However, a short-term policy costs pennies on the dollar compared to a general liability policy. Where a general liability policy might cost $500 or more per year, a short-term policy might be as low as $6 per hour. This structure helps small business owners better budget and manage costs.
You’ll have the same flexibility in coverage when you buy short-term general liability insurance as you would have with a standard policy. You can adjust coverage limits for the policy and change them when necessary. With the short-term policy, you can also adjust the duration based on need.
As mentioned before, a standard general liability insurance policy covers your small business 24/7. A short-term policy doesn’t. This means that you might not be covered for losses that occur in travel, setup, or breakdown unless you specifically insure for that time. If a loss occurs after the insured time, the small business owner is on the hook for the loss because a claim would be denied.
Getting the right policy is important to protect your business adequately.
When buying short-term liability insurance:
Not every insurance provider offers short-term general liability insurance. However, more are starting to do so to appeal to a bigger market. Look for a carrier that makes it easy to get a short-term policy for the time you need at a price you can afford.
A short-term general liability policy is a good option for service providers who don’t have a static location to insure against losses. They typically work in rented locations, and they may need to get a policy to meet contractual requirements. The policy helps protect against financial risks while at that location. These policies are inexpensive and can be incorporated into just about any budget.
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January 27, 2025
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January 23, 2025
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