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 BABY FOOD COMPANY
Example 1: Your brand logo is found to be very similar to that of another food company’s. The other company pursues legal action against you for copyright infringement. Your business would probably have coverage under a general liability insurance policy for damages incurred or a settlement reached outside of court.
Example 2: During production, an employee misuses an expensive machine, causing it to break and dramatically hampering the day’s productivity. The repairs will cost several thousand dollars. In this instance, general liability insurance would likely cover some of the damages.
Example 3: A retail representative is visiting your business on site to negotiate an agreement. He trips on his way down the steps to your office and breaks his arm. If you are found liable, general liability insurance would probably help cover some of the damages or any settlement reached between your business and the individual.
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, baby food companies in America spend 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 baby food 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 baby food companies should obtain:
Product Liability Insurance
Your business can be held liable for damages that result from product use (or misuse) by your customers. It is always a good idea to include safety labels and warnings where applicable, but a product liability policy can keep your business covered in the event of product-related incidents resulting in customer injury or illness.
Commercial Property Insurance
Inventory, tools, equipment, machinery, and other commercial properties represent a large investment for many businesses. If a fire breaks out or a violent storm damages your building, those commercial materials could be badly damaged or destroyed. Make sure you are covered for unpredictable events like these with a commercial property policy. Commercial property policies often cover damage to owned real estate as well.
Types of Coverage Some baby food companies May Need
In addition to the policies outlined above, there are a few other types of coverage your baby food 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.
Workers’ Compensation Insurance
Most states require you to cover any part-time and full-time employees with a workers’ compensation policy. This helps to cover any injuries sustained in the workplace and to protect your business if an injured employee decides to file a suit. Ensure that your workers will be compensated for any injuries while protecting your business at the same time with a workers’ compensation policy.
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.