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 COFFEE ROASTER
Example 1: While visiting your roastery, a child suddenly reaches into the cooling area. They suffer bad burns on their hand and require extensive medical treatment. General liability insurance would likely cover the incident.
Example 2: A delivery driver trips over some empty coffee sacks while dropping off more green beans, and they fracture their elbow in the fall. General liability insurance would probably cover any claim or lawsuit they filed over the incident.
Example 3: During an interview, a profile roaster makes false claims about a competitor that are eventually published. The competitor files a defamation lawsuit, which would likely be covered by general liability insurance.
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 coffee roaster in America spends between $500-$1,200 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 COFFEE ROASTERS 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 coffee roasters should obtain:
Commercial Property Insurance
Commercial property insurance is used to insure the physical assets that businesses own. This can include buildings, equipment, supplies, inventory, and other assets.
Coffee roasters often have substantial build-outs, for most commercial roasters require special gas, electric, and exhaust lines. Additionally, roasters and packaging equipment cost a fair amount. Make sure the commercial property insurance you select provides enough coverage for your business’s build-out, roaster, and other equipment.
This coverage can be purchased within a business owner’s policy (BOP).
Product Liability Insurance
Product liability insurance shields businesses from product-related risks. For example, this insurance may cover claims arising from injuries or property damage caused by a business’s products.
Lots of green coffee beans sometimes contain debris, which makes this an especially important coverage for coffee roasters. Should a chicken bone, bit of tire, ora small stone end up in packaged coffee, it could destroy an expensive commercial grinder or fracture a person’s tooth (if the beans are used for chocolate-covered coffee beans). Product liability insurance would likely cover any such incident.
This insurance is available by itself or as part of a package policy.
TYPES OF COVERAGE SOME COFFEE ROASTERS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your coffee roasters 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 Auto Insurance
If your coffee roastery uses a business-owned vehicle to make deliveries, commercial auto insurance is needed. Businesses that have commercial vehicles are required to insure them with this coverage.
Commercial auto insurance is available by itself or as part of a package policy.
Workers’ Compensation Insurance
If your business has employees, it needs to carry workers’ compensation insurance. This insurance covers job-related illnesses and injuries, and most states require employers to carry it.
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.