Legal Definitions - business-risk exclusion

A business-risk exclusion is a provision in some commercial general liability insurance policies that excludes coverage for common risks associated with doing business. This includes harm to the insured's product or work, damages arising from a product recall, damages arising from the insured's failure to perform under a contract, or damages arising from a failure of the insured's product to perform as intended.

For example, if a company manufactures a faulty product that causes harm to a consumer, the business-risk exclusion may prevent the company from being covered for any resulting damages or lawsuits. Similarly, if a company fails to fulfill a contract with a client, the exclusion may prevent coverage for any resulting damages or legal action.

The purpose of the business-risk exclusion is to limit the liability of insurance companies and encourage businesses to take responsibility for their own risks and losses.