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 BOUNCE HOUSE
Example 1: A child is enjoying one of your bounce houses when he gets his foot stuck in a crevice and breaks his ankle. While your bounce house business may ultimately be found not liable due to the risks the customer assumes when using your bounce houses, there is still the possibility that the child’s parents could file a lawsuit. Your general liability insurance will pay for your legal fees, including any payout or settlement resulting from the injury.
Example 2: An excited parent is visiting your business to do some research on what kind of bounce house experience will be best for her child’s birthday party. While leaving the restroom, she slips and falls on the tile floor and breaks her hip. Your general liability insurance would likely cover the costs of her medical care.
Example 3: Your employee is loading a box of supplies onto a customer’s truck when he loses control of the forklift, driving a fork through the side of the truck. With general liability insurance, the damages to your customer’s property will likely be covered..
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 bounce house in America spends 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.
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OTHER TYPES OF COVERAGE BOUNCE HOUSES 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 bounce houses should obtain:
Product Liability Insurance
While the customers who rent your bounce houses assume a certain level of risk, there is always the possibility one of them could take legal action against your business due to accident or injury. Should a customer file a lawsuit against your bounce house business based on damage caused by one of your products, your product liability insurance would pay for your legal costs. Your coverage includes payment for settlements if they are necessary.
Workers’ Compensation Insurance
The employees you hire to help with operating your bounce house business require workers’ compensation coverage. The coverage will pay for the cost of treating employee injuries sustained doing work-related tasks. It will also help to pay for the lost wages that employees suffer when out of work due to the injury. Most states legally require businesses with employees to carry workers’ compensation insurance.
TYPES OF COVERAGE SOME BOUNCE HOUSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your bounce house 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
A commercial umbrella insurance policy is designed to provide coverage when the limits of your general liability insurance policy are exceeded. An umbrella policy can prove invaluable if you find yourself in a situation where your company is held liable for something extremely costly—such as if you lose a lawsuit and are required to pay extensive damages.
Commercial Auto Insurance
The vehicles you use to deliver the bounce houses to your customers need to be covered by a commercial auto insurance policy. Your state requires the commercial vehicles you operate to be covered by insurance, both to protect you and your employees as well as others on the road. In the event of an accident, the policy will help pay for repair/replacement costs for the vehicle, other vehicles damaged by you or your employees, and medical bills for the injured.
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.