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 ART LESSONS BUSINESS
Example 1: One of your students fails to see a wet floor sign where you have just mopped. She slips, falls, and breaks her arm. She sues your company, claiming that you are responsible for her injuries. The general liability policy you carry will pay for your legal defense, including the cost of a settlement if you settle out of court.
Example 2: A visitor comes to your studio to see the pieces produced by your students. When walking up a short flight of stairs he slips, breaking his wrist. He asks that your business pay for his medical treatment. Your general liability policy would likely cover this expense.
Example 3: One of your competitors claims that you have libeled them in your latest marketing campaign, and you must defend yourself legally. Your general liability policy will pay for your legal costs, including any settlement.
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 art lessons business in America spends between $300-$600 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 ART LESSONS BUSINESSES 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 art lessons businesses should obtain:
Commercial Property Insurance
You have spent a lot on art supplies and equipment. They would be costly to replace if they were damaged in a fire, storm, or another unexpected event. With a commercial property insurance policy, you will have the financial help you need to replace your supplies and equipment so you can get back to doing business.
Professional Liability Insurance
The lessons you give to students to meet your high standards, but that is no guarantee that one of your students will not determine that you have caused harm through your instruction. Professional liability insurance can be tailored to instructors to protect against negligence claims due to mistakes or failure to perform. Were you to be sued, your policy would pay for your legal defense.
TYPES OF COVERAGE SOME ART LESSONS BUSINESSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your art lessons 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.
Workers’ Compensation Insurance
If you have employees, your state likely requires you to carry workers’ compensation insurance. With this insurance, your employees will have coverage to pay their medical bills to treat work-related injuries. It will also help pay for lost wages while they recover.
Commercial Auto Insurance
If you use a vehicle primarily for business, such as for picking up art supplies, teaching in student homes, and other work-related tasks, you need commercial auto insurance. If you are responsible for an accident, it will pay for damages resulting from that accident as well as a medical treatment for anyone injured.
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.