Business liability insurance: the 7 exclusions that most often surprise SMEs

Introduction

For SMEs in Switzerland, liability insurance is a key element of their risk management. It protects against the financial consequences of damages caused to third parties in the course of daily business, whether by products, on company premises, or by employees. However, like any policy, it contains exclusions : situations in which the insurance will not cover the loss. These exclusions, often not readily apparent upon a quick reading of a contract, frequently surprise business owners when a claim arises. This article identifies the seven most commonly overlooked liability exclusions for Swiss SMEs , along with methodological guidelines for managing, documenting, and evaluating your coverage.

In this content, you will learn how to:

• Recognize the exclusions that will create gaps in protection.

• Understand their practical and financial implications.

• Decide if extensions or additional coverage are needed.

The main keyword "exclusions RC entreprise PME Suisse" is present in the key sections.

1. Intentional or expected damages

That which is excluded

Deliberate acts by the company or its employees are generally not covered. Liability insurance is designed to cover accidental or unforeseen events, not intentional or negligent behavior.

Why is this surprising?

A manager might assume that liability insurance will cover all third-party claims, including those arising from an employee's actions. However, when damage is intentional or deemed "reasonably expected," the policy may deny compensation. This exclusion is a market standard: insurers do not assume risks resulting from deliberate acts.

SME Scenario – Surprise Exclusion

An employee modifies equipment following an internal directive, resulting in damage to an external service provider. If the insurer considers this to be a deliberate and foreseeable action, it may refuse liability coverage, leaving the SME to bear the costs.

What needs to be documented

• Statements of the facts at the time of the incident.

• Description of intention (or lack of intention).

• Internal policies and related procedures.

2. Liability related to contracts and additional obligations

That which is excluded

Many liability insurance policies exclude damages arising from obligations that the company has voluntarily assumed in a contract (e.g., indemnity or liability clauses that are broader than the law).

Frequent case

You sign a contract with a client that includes a "hold-harmless" or expansive indemnity clause. If a claim arises related to these contractual obligations, your liability insurance may not apply, as the liability assumed is not that stipulated by common law.

Mini case study

A small service company contractually agrees to cover all damages related to a project, even beyond legal requirements. After an incident, the liability insurer refuses coverage because the commitments exceed those imposed by civil liability law.

Methodological reference

• Carefully analyze the obligations you accept in your third-party contracts.

• Document all compensation clauses and compare them with your insurer's definition of insured contracts .

• Request coverage extensions if necessary.

3. Damages related to professional services (excluding trades)

That which is excluded

General liability insurance does not usually cover damages due to errors or omissions in the performance of specialized professional services: advice, expertise, technical design, etc.

Where this poses a problem

A consulting firm that advises a client on a project may face a claim for damages for advice deemed erroneous. Without professional liability (E&O) insurance, standard liability insurance does not cover this.

Decision points

• Identify whether your activity includes intellectual services.

• Consider taking out appropriate professional liability insurance if applicable.

4. Incidents related to vehicles and motorized equipment

That which is excluded

Claims related to the use, operation or ownership of motor vehicles (cars, trucks, etc.) are not normally covered by general liability insurance: they require car insurance or a dedicated guarantee.

Why it's a trap

A small or medium-sized enterprise (SME) that owns vehicles for deliveries or travel might believe that these incidents fall under its liability insurance policy. In reality, without commercial auto insurance, these events will not be covered.

Key points to document

• Inventory of vehicles used in the activity.

• Rental and usage contracts per employee.

• Dedicated car insurance policy.

5. Pollution and environmental damage

That which is excluded

Exclusions related to pollution or environmental damage are common in general liability insurance policies. This means that if a hazardous substance causes environmental damage, liability coverage may be limited or denied.

Decision to be steered

• Check if your activity is exposed to pollutants.

• Consider extensions or environmental liability insurance.

6. Damage to company property

That which is excluded

Liability insurance does not cover damage to your own property, inventory, or equipment. These risks are covered by separate property insurance or business multi-risk insurance policies.

Risk of gap

Without adequate multi-risk insurance, an SME could bear the costs of repairing or replacing critical equipment on its own.

7. Data Damage and Digital Liabilities

That which is excluded

Damages related to data loss, system corruption or cyberattacks are not covered by a classic RC: they require specific cyber coverage.

Importance for SMEs

With the digitalization of operations, cybersecurity gaps become a high financial and reputational risk.

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Guidelines and checklist

Checklist to identify unexpected exclusions in your business liability insurance policy:

| Exclusion type | Check your policy |

| Intentional damage | Yes / No |

| Contractual liability | Yes / No |

| Professional Services | Yes / No |

| Vehicles/Equipment | Yes / No |

| Pollution / Environment | Yes / No |

| Property damage | Yes / No |

| Data damage | Yes / No |

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Common mistakes and how to avoid them

Mistake 1: Only reading the police summary

Solution: Review the detailed exclusion clauses with your broker.

Mistake 2: Neglecting specialist services

Solution: Map your activities and compare each risk item with standard exclusions.

Error 3: Failing to document third-party contracts

Solution: Compare any compensation clause with the definition of insured contract in the liability insurance contract.

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Questions to ask your insurer/broker

1. What specific exclusions apply to our business liability insurance policy?

2. How does the police handle the contractual obligations we require?

3. Do we have a gap related to our professional services?

4. Are claims related to the use of vehicles covered or do they need to be insured separately?

5. Is environmental coverage included or excluded?

6. Does damage to company property require separate multi-risk insurance?

7. How does liability insurance cover digital data and software losses?

8. What endorsements are recommended for our activity?

9. Are there any exclusions specific to our canton or sector?

10. What recent claims have been denied by your comparable clients?

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Conclusion

Understanding the exclusions in your Swiss SME business liability insurance is essential to avoid costly surprises. By structuring your audit, documenting key clauses, and engaging in transparent dialogue with your broker, you can anticipate gaps, determine necessary extensions, and manage your risks with complete clarity. A proactive approach improves your governance and secures your decisions.