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 COOKIE DOUGH CAFE
Example 1: During an event held at the cafe, there is an altercation between two customers. Personal property is damaged and one person is sent to the hospital with an injury. Your general liability insurance should cover you if you are sued for medical costs and replacement of damaged personal property.
Example 2: A customer drops a glass of water and fails to inform your staff of the broken glass. As a result, a customer cuts their foot and is unable to work for several weeks. A general liability policy would most likely compensate the customer for medical bills and lost wages.
Example 3: Your recently redesigned business cards catch the eye of a local business owner who claims similarities to their copyrighted logo. He is suing for copyright infringement, seeking damages in the amount of $10,000. A general liability policy should cover legal fees and any potential payout. .
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.
On average, cookie dough cafes in America spend 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.
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 cookie dough cafes should obtain:
Commercial Property Insurance
Commercial property insurance will pay to repair or replace owned real estate and other property, including equipment and supplies, that is damaged by covered events. You likely had extensive buildout costs and purchased specialized cooking equipment. To ensure proper coverage, carefully consider these costs when purchasing your policy.
This coverage is frequently available as part of a business owner’s policy.
Product liability insurance
Product liability insurance offers protection should a product you make and sell lead to illness or injury. These policies are tailored to the specifics of your business and the products you sell.
Workers’ Compensation Insurance
You are likely required by state law to ensure that each member of your workforce is financially protected should they sustain an injury or illness at work. Workers’ compensation insurance provides protection. While most states allow business owners to exempt themselves from coverage, those who work onsite regularly are urged to forego this exemption.
Workers’ compensation is typically purchased as a standalone policy.
In addition to the policies outlined above, there are a few other types of coverage your cookie dough cafe 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.
Business Interruption Insurance
Most small businesses rely on a regular business to keep the doors open and employees paid. Being out of work for an extended period of time forces many to close their doors forever. If an event like a fire or other disaster keeps you from being able to open for a period of time, business interruption insurance can help business owners make up some of their lost revenue.
Business interruption insurance should be available as part of a business owner’s policy.
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.