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 REPAIR SHOP
Example 1: A customer asks to take a bike out for a test ride. He loses control and falls off the bike, breaking his arm. He sues your business. Your general liability insurance will pay for your legal fees, including a settlement if one is necessary.
Example 2: The child of a customer is exploring your shop while you talk to her father. She falls into a stack of tools and equipment, sustaining injuries that require medical care. Her father asks that you pay for her treatment. Your general liability insurance would likely cover this expense.
Example 3: A competing bike repair shop has sent you a letter, claiming you slandered their business when you spoke to the local news station. They intend to file a lawsuit. Your general liability insurance will pay for an attorney and cover the cost of a settlement if one is necessary.
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 repair shop in America spends between $500-$1,500 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 BIKE REPAIR 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 repair shops should obtain:
Commercial Property Insurance
All of the supplies and equipment you have invested in to operate your bike repair shop would be costly to replace if you were to lose them in a fire or other unexpected event. But if you have commercial property insurance, you can file a claim with your insurer as long as the loss was caused by a covered event, and you should be able to get money to help with replacement costs.
Professional Liability Insurance
There is always a chance that a customer could claim that your work caused them injury. If you are sued by a customer, for example if a customer claimed you made a mistake in your repair work that caused her injury, your professional liability insurance would pay for your legal costs.
TYPES OF COVERAGE SOME BIKE REPAIR SHOPS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your bike repair 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
Most states require employers to carry workers’ compensation insurance, so if you have employees, chances are you need a workers’ comp policy. If an employee is hurt performing job-related duties, the policy will pay for his or her medical treatment. The policy will also pay for lost wages If the employee cannot work while they are recovering.
Product Liability Insurance
If your business sells products, like bike accessories, a product liability policy will protect you in case a customer claims one of your products caused him or her injury. If a customer sues your business over a product you sold, your policy would cover the cost of hiring an attorney. It would also cover the cost of paying a settlement if you needed to settle the case out of court.
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.