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 CANDY STORE
Example 1: An excited child sticks his hand far into a candy dispenser, where it becomes stuck. Extracting his hand causes him injuries that require medical care. His parents determine that your business is responsible for the injuries and file a lawsuit against your company. The general liability insurance policy that you carry will pay for your legal costs. It will also pay for any payouts or settlements if you settle the case out of court.
Example 2: One of your customers is not paying attention to the wet floor sign placed by an employee. The customer tries to round the corner of an aisle too quickly and slips and falls. Her injuries include a broken elbow and a concussion. She demands that your business pay for her injuries. Your general liability insurance will likely help to pay for the costs of her medical treatment.
Example 3: Your candy store and another competing candy store are engaging in marketing campaigns to attract business. Your competitor has determined that your current marketing campaign is too direct in its criticism and hires an attorney to file a lawsuit. The general liability insurance you have will pay for your legal costs in relation to slander and libel. It will also pay for the cost of settling out of court if 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 candy store in America spends between $450-$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.
OTHER TYPES OF COVERAGE CANDY STORES 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 candy stores should obtain:
Product Liability Insurance
The candy and other goods you sell are intended to bring happiness to the customer, but there is always the possibility that a customer will decide your product caused him or her injury. If this happens and the customer files a lawsuit against your business, you will need to defend yourself legally. A product liability insurance policy will pay for the costs of your defense, including the cost of payments or settlements if you wind up settling the issue out of court.
Commercial Property Insurance
In the event of a fire or other disaster, most or all of your candy and other inventory could be destroyed. Replacing so much inventory would put a significant financial burden on your business, but a commercial property insurance policy can help cover the costs and allow you to get back to selling candy.
TYPES OF COVERAGE SOME CANDY STORES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your candy store 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
In most cases, if you have employees, your state will require you to carry workers’ compensation insurance. There are many benefits to workers’ comp insurance that go far beyond meeting your legal requirements. A workers’ comp policy will pay for the medical treatment necessary to treat work-related injuries sustained by your employees. If they are injured on the job, workers’ comp will kick in and pay for treatment as well as help cover lost wages while they are unable to work.
Commercial Auto Insurance
If you have a company vehicle that is used primarily for business, that vehicle needs to be covered by a commercial auto insurance policy. The coverage is likely required by your state for you or your employees to be able to drive the vehicle. In the event of an accident, the policy will help cover the costs of repair or replacement of the vehicle. If you or your employees are responsible for the accident, the policy will pay for repairs to the other vehicles involved and for the medical treatment of any injured parties.
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.