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 A BIKE RENTAL SHOP
Example 1: A young customer is showing his friend how quickly the chain spins when he cranks the pedal on a bike. In his excitement, he accidentally gets his fingers entangled between the chain and the gears, causing serious injury that requires medical treatment. Your general liability insurance policy will pay for the customer’s medical care.
Example 2: A customer is trying to determine what size bike is best for her by sitting on bikes of different sizes. She tries one that is too tall for her and loses her balance, falling over into other bikes and sustaining injuries. A general liability insurance policy will pay for the treatment of any injuries she sustained in your place of business.
Example 3: One of your employees is transporting multiple bikes on a hand truck through your parking lot when he hits the luxury car of a visitor to your store. The cost of repairing the damage caused to the visitor’s property is covered by your general liability insurance policy.
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 bike rental shop in America spends between $400-$1,100 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 BIKE RENTAL SHOPS 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 bike rental shops should obtain:
Commercial Property Insurance
The bikes you rent to your customers are the foundation of your business. If some of them are damaged by something like fire or vandalism, they will be expensive to replace. And as long as you are without bikes to rent, you are unable to bring in more income. A commercial property insurance policy will help to pay for the replacement of your commercial property, including your bikes and any other property damaged by an unexpected event.
If you rent enough bikes, you will most likely have some of them stolen. Crime insurance is designed to cover your business when you are the victim of criminal activity like theft. If someone does steal one or more of your bikes, your crime insurance policy will help to cover the cost of replacing them so you can keep on doing business.
TYPES OF COVERAGE SOME BIKE RENTAL SHOPS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your bike rental shop 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
Businesses that hire employees need workers’ compensation insurance to protect them and their employees, and bike rental shops are no exception. Workers’ comp coverage pays for medical treatments for job-related injuries and lost wages that result from those injuries. It also ensures that you meet the legal obligation required by your state for employers to carry this coverage if you have employees.
Commercial Umbrella Insurance
In the event that your general liability insurance policy limits are exceeded, a commercial umbrella policy will pick up where the general liability policy leaves off. General liability insurance is sufficient for most situations, but there are times where it is not enough—such as when your company loses a significant legal case and is required to pay extensive damages.
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.