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 CONSTRUCTION CLEANUP BUSINESS
Example 1: An employee uses the wrong chemical during clean up, causing extensive damage to the newly completed building. A general liability insurance policy will help to cover the costs of replacing the damaged materials, up to your policy limits.
Example 2: A visitor to the construction site trips and falls over the vacuum cleaner power cord while your employee is vacuuming a room. The visitor sustains injuries and requires medical care. Your general liability coverage will cover the costs of medical treatment for the injured party.
Example 3: One of your competitors decides to sue your company for libel based on an advertising campaign you recently ran. Your general liability policy should provide protection for personal liabilities such as libel, which means it should help cover the costs of defending yourself from the legal action of your competitor and the cost of paying a settlement 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.
The average construction cleanup business in America spends 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.
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 construction cleanup businesses should obtain:
Workers’ Compensation Insurance
The laws in your state most likely require you to carry workers’ compensation coverage if you have employees working for you. There are several benefits of carrying workers’ compensation insurance, including covering medical bills for the treatment of work-related injuries for your employees and helping to cover lost wages for injured workers. It can also help pay for the medical care of workers who become ill due to their job.
Commercial Auto Insurance
Getting your employees, equipment, and supplies to the work site requires one or more company vehicles. Any vehicle used primarily for your business needs to be covered by commercial auto insurance. With this coverage, you have protection in the event of an auto accident. Your coverage will help pay for the repair or replacement of the vehicle, as well as medical care for injured employees and third parties.
In addition to the policies outlined above, there are a few other types of coverage your construction cleanup business 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
Sometimes the limits of your general liability insurance may be exceeded, such as in an event where your company loses a lawsuit and is required to pay extensive damages. Commercial umbrella insurance is designed to start paying when the limits of your general liability policy are reached. It covers the extra expenses up to the limit of your umbrella policy.
Commercial Property Insurance
In the event of an accident, such as a fire, you could lose a large majority of your cleaning equipment and supplies. The cost of replacing these could be significant. Commercial property insurance will help cover these costs so you can get back to work as soon as possible.
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.
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.