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.


Example 1:  During a tutoring session, you accidentally knock a drink over, damaging your student’s laptop and mobile phone. Your general liability policy would cover the cost to repair or replace the devices.

Example 2:  During a severe rainstorm, a student’s parent slips and falls on your tile floor. Even though you had a warning sign prominently displayed, you are being sued for their injuries. General liability insurance would cover legal representation and any damages awarded in the lawsuit.

Example 3:  While at a client’s home for a private tutoring session, you knock over a valuable art piece. Your general liability policy would cover the cost to repair or replace the damaged art.

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, test prep companies in America spend 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:

Graph showing average price of general liability insurance prices per industry

Several factors will determine the price of your policy. These include your:

  • Location
  • Deductible
  • 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.

Recommended action box icon

How much will the right insurance cost you?

See offers from our recommended professional liability insurance provider

Get a Free Quote

Other Types Of Coverage Test Prep Companies 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 test prep companies should obtain:

Professional Liability Insurance

While you may consistently deliver the level of service agreed upon, things don’t always work out as expected. If a student underperforms on a test or you accidentally teach the curriculum incorrectly, the client may take legal action against you. Professional liability insurance will cover the cost of legal defense, as well as any resulting payout.

Commercial Property Insurance

If you own the building you and your team tutor out of, it is critical that your property is adequately insured in the event of a loss. A commercial property insurance policy provides coverage for your commercial building and any business property kept onsite. Owners are encouraged to be thorough, including the replacement cost of business property and the cost of all building renovations when determining coverage limits.

Workers’ Compensation Insurance

Workers’ compensation provides coverage for medical bills and lost wages if an employee is injured or falls ill while on the job. If a lawsuit occurs as a result of this injury, the policy would also cover related legal fees. While the requirements vary from state to state, business owners are required by law to carry this coverage for each of their employees.

Types Of Coverage Some Test Prep Companies May Need

In addition to the policies outlined above, there are a few other types of coverage your test prep company 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.

Home-based business insurance

Business owners who operate out of their home are encouraged to purchase this coverage. Since homeowners insurance often excludes business-related losses, a home-based business insurance policy is there to protect you, ensuring seamless coverage.

Commercial Auto Insurance

Many test prep companies offer a variety of services, including in-office tutoring and one-on-one tutoring in their clients’ homes. If this is the case, you may spend a good deal of time on the road, increasing your risk for an auto accident. If a loss occurs while on the job, coverage may be excluded from your personal auto policy. To ensure no gaps in coverage, business owners should purchase a commercial auto policy.

Each state mandates how much auto insurance coverage is required. However, the minimum limits leave many business owners underinsured. Working with your insurance agent to determine proper coverage limits can help protect both you and your business.

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) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
  • Streamline your business' internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.