About General Liability Insurance
All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).
Some of the risks CGL insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
While businesses aren’t legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR AN ASSISTED LIVING FACILITY
Example 1: During the night, a resident calls for help to use the bathroom. No one hears her, and she slips and falls on her way to the bathroom, breaking her hip. If found liable, general liability insurance would likely help to cover damages owed by your business, including court-mandated payments and settlements.
Example 2: A resident receives some food he should not be eating due to a menu mix-up. He goes into diabetic shock, leading to serious medical complications. If found liable, your business would probably be covered by general liability insurance for resulting damages, medical payments, or settlements.
Example 3: A visiting family member asks one of your employees to park her car as she hurries toward her father's room. The employee obliges her, but it is a stick shift and he drives it into a pillar supporting your building's resident pickup/dropoff area. General liability insurance would probably help in covering any damage to the customer’s car.
Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It’s always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.
Cost Of General Liability Insurance
The average assisted living facility in America spends between $400-$700 per year for $1 million in general liability coverage.
Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:
Several factors will determine the price of your policy. These include your:
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy. A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
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Other Types Of Coverage Assisted Living Facilities Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all assisted living facilities should obtain:
Professional Liability Insurance
Businesses that are responsible for completing complex or sensitive work often benefit from professional liability insurance. This policy is particularly important for an assisted living business that performs the valuable care work of helping the elderly live dignified lives. In the event that your business undertakes careful medical assistance that ultimately goes wrong, a professional liability policy can protect you from serious losses.
Commercial Umbrella Insurance
Commercial umbrella policies are a great idea for any business that performs sensitive work in general. While ineffective alone, an umbrella policy is purchased atop other maximized policies, allowing for additional coverage normally ignored by standard insurance. For an assisted living business with so many complex variables in play, this policy can keep you covered in the event of unanticipated damages.
Types Of Coverage Some Assisted Living Facilities May Need
In addition to the policies outlined above, there are a few other types of coverage your assisted living facility may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.
Workers' Compensation Insurance
If your business expands beyond a point where you can reliably manage your clients independently, you'll need a workers’ compensation policy to cover your employees. Part-time and full-time employees must be covered by compensation insurance as a matter of law. This policy will provide coverage for employees who are injured on the job, including disability and death benefits resulting from work incidents.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business’ financial losses after an incident occurs, but it’s much better to avoid losses altogether.
With this in mind, here are three things you can do to better protect your business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up a limited liability company (LLC) or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Streamline your business’ internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.
FREQUENTLY ASKED QUESTIONS
What is included in a business owner’s policy?
A typical business owner’s policy includes general liability, business interruption, and property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
What is the difference between business insurance and general liability insurance?
“Business insurance” is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Do I need insurance before I start a business?
You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.
Will insurance protect my business from everything?
Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.