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 BOOKSTORE
Example 1: While trying to pull a book from the top shelf, a customer pulls the entire bookshelf down on top of himself. He is injured in the process and requires medical care. A general liability insurance policy will pay the medical bills for the customer’s injuries.
Example 2: A customer brings you a rare book to examine. One of your employees accidentally spills a cup of coffee on the book, ruining it. The customer expects you to pay for a replacement if one can be found. Your general liability policy will pay for the repair or replacement of customer property that is damaged by you or your employees.
Example 3: You choose a logo for your business that you like and begin to use it on your marketing materials. A competitor decides that your logo is too similar to theirs and files a lawsuit against your business. The general liability insurance you have will pay for your legal fees if you are sued by a competitor or a customer, and it will also pay for a settlement if you wind up settling out of court.
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 bookstore in America spends between $400-$700 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 BOOKSTORES 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 bookstores should obtain:
Commercial Property Insurance
The books in your store are the foundation of your livelihood. Losing them to an unforeseen event, like a fire, would make it extremely difficult to keep your business going. Carrying a commercial property insurance policy will help you avoid having to pay for replacing your books and other commercial property out of your own funds.
Workers’ Compensation Insurance
The employees in your bookstore need the protection offered by workers’ compensation insurance. This coverage will pay for medical care for employees injured in job-related duties as well as cover the cost of lost wages should the employee be unable to work for a period of time. Workers’ comp is mandated by most states for employers, although the specifics of each state vary.
TYPES OF COVERAGE SOME BOOKSTORES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your bookstore 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 Insurance
There are limits to a general liability insurance policy. Once those limits are reached, the policy will stop paying, and you will be left to pick up any extra expenses—unless you have commercial umbrella insurance. With a commercial umbrella insurance policy, once your general liability insurance policy limits are reached, the umbrella policy will take over.
Commercial Auto Insurance
If you have a vehicle that you use for primarily business purposes, you will need to have a commercial auto insurance policy. The policy you have for your commercial vehicle will protect you, your employees, and anyone else involved in an accident with the commercial vehicle. It will pay for medical care for the injured and any property damage caused by the vehicle.
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.