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.
Learn more about the risks covered by general liability insurance.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A HALLOWEEN COSTUME SHOP
Example 1: While mopping your shop floor, the cleaning crew fails to use non-skid wax. During delivery, the next morning, a vendor slips and falls on the floor, needs emergency medical care and decides to sue. General liability insurance would pay for your legal defense and any awarded damages.
Example 2: When an employee handles your business’ social media posts while you’re out, she mentions one of your competitors sells subpar products from overseas. The competitor sues your company for defamation, claiming the post caused his shop to lose customers. General liability insurance would cover your legal fees and any awarded damages.
Example 3: As one of your employees captures and detains a shoplifter, they both fall to the ground. The shoplifter sues your business, seeking damages for his injuries stemming from the fall. General liability insurance would cover your legal fees and any damages awarded to the claimant.
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
On average, halloween costume shops in America spend between $300 - $800 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.
How much will the right insurance cost you?
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Other Types Of Coverage Halloween Costume Shops 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 Halloween costume shops should obtain:
Commercial Property Insurance
Whether you own or rent your retail space, you should include this coverage in your insurance portfolio. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property. This includes your building as well as the inventory and other supplies stored there.
You can typically purchase commercial property insurance as part of a business owners policy (BOP).
Workers’ Compensation Insurance
Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover but also any disability or death benefits stemming from a workplace accident. Additionally, it protects employers against lawsuits, offering legal representation when an employee sues.
You can typically purchase workers’ compensation insurance as a standalone policy.
Types Of Coverage Some Halloween Costume Shops May Need
In addition to the policies outlined above, there are a few other types of coverage your Halloween costume shop 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.
Product Liability Insurance
Product liability insurance offers protection to businesses that manufacture, supply or sell products. If a customer names your company in a lawsuit because they claim your product injured them in some way, product liability insurance would cover your legal fees and any required settlement,
You can typically purchase this coverage as part of a business owners policy (BOP).
While you may know and trust your staff, many Halloween costume shops need to hire seasonal employees to manage the business properly. Yet, most general liability insurance policies don’t cover damages resulting from employee dishonesty, fraud, or forgery. Crime insurance provides an extra layer of protection in the event your company is the victim of a crime.
Data Breach Insurance
Retailers make profitable targets for online hackers given the vast amount of information they store. This coverage — also known as cyber attack insurance — protects your business from liability if a cybercriminal hacks into your computer system, steal sensitive customer data, and your customers sue you for damages. In the event of such a lawsuit, data breach insurance would cover your legal fees and any settlement payouts.
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.