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 AN ART SUPPLY STORE
Example 1: One of your staff members accidentally bumps into a customer, causing them to fall into a stack of merchandise. General liability Insurance will likely cover the cost of the customer’s injuries.
Example 2: You sell a defective set of paints to a customer and the merchandise ruins a valuable commercial project they were working on. General liability Insurance will likely cover their claims against you if the customer can prove a loss of income.
Example 3: A customer signs up for sculpture class at your store and purchases a full set of expensive supplies to help them complete the course. During the class, their tools are ruined and the customer blames faulty sculpture techniques taught in the class. General liability insurance will cover the cost of the tools or pay to fight the claim.
Example 4: You want to open your store as part of a franchise rather than an independent entity. Having enough general liability insurance can help ensure your approval for the larger parent company.
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, art supply stores in America spend 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.
Other Types of Coverage art supply stores 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 supply stores should obtain.
Commercial Property Insurance
Commercial property insurance covers not just the building you're located in, but also the merchandise stored within it. If a covered event such as inclement weather or vandalism damages either the structure or its contents, you can use commercial property insurance to recoup your losses. Inventory can be damaged easily in an art supply store, and depending on the cost of the products, it can be expensive to replace without proper insurance coverage.
Workers' Compensation Insurance
If you have employees working in your art supply store, workers' compensation insurance will cover them in case they're injured on the job. While an art supply store may not be as dangerous as many other businesses, your workers may be handling dangerous chemicals or tools throughout the day or stocking high shelves with heavy boxes.
Professional Liability Coverage
Professional liability insurance covers you in case you or your employees make a mistake on the job. For example, an employee mistakenly advises a customer that a certain product will not aggravate their skin condition, but it does. Professional liability insurance will help you fight the claim or settle the costs of the customer’s medical bills.
Types of Coverage Some art supply stores May Need
In addition to the policies outlined above, there are a few other types of coverage your art supply store 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 Liability Insurance
This form of insurance offers extra protection in case of a particularly expensive liability claim. For example, if you decide to fight a lawsuit and the suit drags on for months, you'll need additional coverage to cover attorney and court fees.
Commercial liability insurance can also help you restore your reputation in the face of public scrutiny. This form of insurance is highly recommended if you sell supplies to professional artists.
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.