What Isn't Covered By Commercial Insurance
Standard Exclusions Across Policies
Commercial insurance policies universally exclude certain perils regardless of policy type or industry. Intentional acts by the business owner or employees that cause damage or harm receive no coverage. War, nuclear incidents, and government action (like condemnation or seizure) remain excluded across all standard policies. Normal wear and tear, gradual deterioration, and maintenance issues find no protection, as insurance covers sudden and accidental damage rather than expected operational costs. These fundamental exclusions reflect basic insurance principles that coverage applies to fortuitous (unexpected and unintended) events rather than deliberate actions or inevitable deterioration.
Property Coverage Limitations
Commercial property policies contain specific exclusions beyond standard limitations. Most policies exclude flood damage entirely, requiring separate National Flood Insurance Program coverage or specialized endorsements. Earthquakes and movement similarly receive no standard coverage without specific riders. Certain property types like cryptocurrencies, accounts receivable, and electronic data often have severely limited protection or complete exclusions. Vacant buildings typically lose coverage after 30-60 days of unoccupancy unless specific vacant building coverage is purchased. These property exclusions reflect either catastrophic risk profiles requiring specialized underwriting or value types difficult to verify after loss.
Liability Protection Gaps
Commercial general liability policies maintain significant coverage gaps despite their broad protection. Professional errors and omissions receive no coverage under general liability, requiring separate professional liability policies. Employment-related claims, including discrimination, harassment, and wrongful termination, remain excluded without employment practices liability insurance. Pollution liability typically receives minimal or no coverage under standard policies despite representing substantial exposure for many businesses. Directors and officers face personal liability exposures unprotected by general liability without specific D&O coverage. These liability exclusions separate distinct risk categories requiring specialized underwriting approaches beyond general liability frameworks.
Business Interruption Considerations
Business interruption coverage contains notable exclusions affecting continuity protection. Market conditions, economic downturns, or reduced demand receive no coverage regardless of impact severity. Interruption from pandemics and communicable diseases typically remains excluded following industry-wide policy revisions after COVID-19. Utility service interruption receives coverage only with specific endorsements and typically requires physical damage to utility provider property. Interruption from internet or technology system failures generally requires separate cyber insurance rather than falling under standard business interruption protection. These exclusions differentiate between physical damage consequences and broader business challenges beyond traditional insurance scope.
Cyber Exposure Gaps
Standard commercial policies provide minimal protection against growing cyber exposures. Data breach response costs, notification expenses, and regulatory penalties receive no coverage under traditional policies. Cyber extortion, ransomware payments, and business email compromise losses require specialized cyber liability insurance. First-party business interruption from system downtime following cyber attacks falls outside standard business interruption coverage. These technological risk exclusions reflect the rapidly evolving nature of cyber exposures and their unique risk characteristics requiring specialized underwriting approaches.