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.
Learn more about the risks covered by general liability insurance.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A CARPET CLEANING COMPANY
Example 1: Your carpet shampooer malfunctions, shooting water and cleaning fluid all over the home recording studio of a client. His equipment is ruined. Your general liability insurance would likely help to pay for replacing his recording equipment.
Example 2: One of your employees is rushing to finish a cleaning job when he runs into the client, knocking her backward and causing her to hit her head on the corner of a table. She requires medical care for her injuries and asks that you pay for that medical care. Your general liability insurance would likely pay for her treatment.
Example 3: A recent client calls and accuses one of your employees of ruining several of the expensive Persian rugs in her collection. She files a lawsuit against your business for damages. A general liability insurance policy would cover the cost of your legal defense and a settlement if one is required.
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
On average, carpet cleaning businesses in America spend 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 Carpet Cleaning Businesses 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 carpet cleaning businesses should obtain:
Professional Liability Insurance
Professional liability insurance is designed specifically for your business needs. As a professional carpet cleaner, there is a possibility that a client could claim you made mistakes that caused him or her injury, financial or otherwise. If he or she were to file a lawsuit against your business, your professional liability insurance would cover the cost of your legal defense.
Commercial Auto Insurance
Your carpet cleaning vehicles should be covered by commercial auto insurance. With a commercial auto policy, you and your employees are protected while driving. If you or an employee causes an accident, the policy will pay for damages to vehicles and medical care for the injured.
Types Of Coverage Some Carpet Cleaning Businesses May Need
In addition to the policies outlined above, there are a few other types of coverage your carpet cleaning company 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
If you have employees, chances are your state requires you to carry workers’ compensation insurance. If an employee is injured performing job-related duties, the workers’ comp policy you have will pay for his or her medical treatment. It will also pay for some of the wages the employee loses while recovering.
Commercial Property Insurance
All of the equipment and supplies you have invested in would be costly to replace if it were lost in an event like a fire. But with commercial property insurance, you can get help from your insurer to pay for repairs or replacements. As long as the damage was caused by a covered event, you should be able to get financial assistance after you file a claim.
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) or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- 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.