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 ARCADE
Example 1: The most common type of accident to take place in an arcade is a trip and fall incident. If one of your customers becomes injured during a game of laser tag or as they race from one game to another, you could be found liable for damages. With the help of general liability coverage, you can protect your customers in the event of an accident involving your specialized arcade equipment.<\/em><\/p>
Example 2: While many business owners don’t consider their parking lot to be a particularly important area, it is actually a very common accident site. As visitors try to maneuver around other vehicles, bikes, and pedestrians, there's great potential for an accident to take place. And if the accident is a result of poor maintenance, general liability insurance can help to cover the cost of damages.<\/em><\/p>
Example 3: Arcades are a great hangout for people of all ages. But it’s important to keep in mind that some gamers can be extremely competitive and may become angry or frustrated when things don’t go their way. In an arcade, there is an increased risk of customers hurting themselves and others when rattling a machine or losing their temper.<\/em><\/p>
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 arcade in America spends 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.
OTHER TYPES OF COVERAGE ARCADES 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 Arcades should obtain:
Business Interruption Insurance
Arcades are not only a place for fun and games, but they are also home to many different pieces of valuable specialty equipment. If this equipment becomes damaged or destroyed in an incident, the business income that you rely on could be lost. With the help of business interruption insurance, you can help to cover the loss of business income that you will incur as you suspend operations to repair or replace your equipment.
Workers’ compensation insurance is another important insurance coverage that will help to protect your team. In fact, workers’ compensation coverage is required in many states for any business that has part-time and full-time employees. This type of insurance coverage is designed to cover your employees’ wages and medical expenses if they get sick or become injured on the job.
TYPES OF COVERAGE SOME ARCADES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your Arcade 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.
Commercial Umbrella Coverage
In the modern world, even small businesses are at risk of accidents and actions that could result in large liability judgments against them. And while your general liability coverage will protect against most of these cases, an umbrella policy provides you with an extra layer of protection that goes above any other policies you may have in place. This is especially helpful in situations where damages related to an incident exceed your primary policy limits.
Data Breach Insurance
Many arcades have return customers who like to keep important payment information on file. If you have a loyalty club or keep important customer information in your computer system, your customers’ personal and financial information could be at risk of a cyber attack. With the help of data breach insurance, you can protect your business and customers from a system breach that results in stolen data.
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.
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.