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 SHOE LINE BUSINESS
Example 1: You are showing an investor around your facility when she trips over a cable and falls, breaking her arm. She demands that you pay for her medical care. Your general liability insurance policy will likely pay for her treatment if you file a claim.
Example 2: A competing shoe line has sued your business for libel. Your general liability insurance policy covers legal defense fees when someone accuses your business of libel. It will pay for your lawyer and for a settlement if one is necessary.
Example 3: An employee is bringing in a large box of product from the back when he knocks over a visitor to your business. The visitor breaks his arm and sues your company. Your general liability insurance policy will pay your legal defense costs, including the cost of hiring an attorney.
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, shoe lines in America spend between $350 - $750 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.
Other Types Of Coverage Shoe Lines 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 shoe lines should obtain:
Commercial Property Insurance
You invested a large amount of capital in the equipment, supplies, inventory, and other items you use to run your business. If you were to lose your property in an unexpected event like a fire, it would be difficult to replace. Commercial property insurance can help in such circumstances. It will help pay for the replacement of property lost in events covered by the policy.
Workers’ Compensation Insurance
The employees you have at your shoe line need the coverage that comes with workers’ compensation insurance. If they get injured performing their job-related tasks, the policy will pay for their medical treatment. If they are unable to work for a time due to the injuries, the policy will help pay their lost wages.
Types Of Coverage Some Shoe Lines May Need
In addition to the policies outlined above, there are a few other types of coverage your shoe line business 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
You want your shoe line to make your customers happy and satisfied with their purchases. However, there is always a chance that a customer could decide that your product caused them injury and sue your business over it. A product liability policy will pay your legal defense costs in these circumstances. It will pay for your lawyer and for a settlement if necessary.
Commercial Umbrella Insurance
A commercial umbrella insurance policy will pick up where your general liability insurance policy leaves off. If you exceed the limits of your general liability policy, such as if you were to lose a big lawsuit, the umbrella policy would kick in and start paying. It will help you avoid paying damages out of pocket.
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.
Steps After Getting Business Insurance
Depending on where you are in your business building process, here are some other actions you may need to take before getting started:
- If you’re just starting, finding the best name for your business is a great first step. Check out TRUiC’s Business Name Generator.
- After finding the perfect name, get a logo with our Logo Generator.
- Every business needs a website. Using a website builder like the GoDaddy Website Builder or Wix makes building a website simple and fast! Check out our review of the Best Website Builder.
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.