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 CURRENCY TRADER
Example 1: While trading currency, your company profits heavily from a glitch in the global software system you’re using. Later, your company is accused of fraud or unfair practices. General liability would likely help cover the costs of defending yourself against the charges.
Example 2: A friend comes to your office to meet you for lunch. While entering, he slips and falls on a floor that wasn’t properly cleaned, and he blames your company for his injuries. General liability would likely cover the resulting injuries in the case of a lawsuit.
Example 3: A currency trading company in a different country claims that your business name is too similar to their own. This similarity is causing confusion on the global market, and they feel they’re losing business. General liability insurance would likely help cover the costs of settling the matter.
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, currency traders in America spend between $400 - $700 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 Currency Traders 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 currency traders should obtain:
Commercial Property Insurance
Commercial property insurance protects you from the cost of repairing or replacing owned real estate, equipment, and supplies. If you’re investing money in complex and powerful equipment, this insurance can also stave off heavy losses from theft or unexpected emergencies.
Business Interruption Insurance
Currency traders can be heavily influenced by global events and even local affairs. If your business is halted by an event outside your control, you may be able to file a claim for business interruption insurance. This insurance will help you recoup any lost income so you can continue to pay your expenses.
Commercial Umbrella Insurance
A lot of unexpected events can occur in the complicated world of currency trading. Owners may not even realize that certain factors were threats to their business until they occur. Commercial umbrella insurance is designed to kick in when your general liability policy’s limits are reached, such as in the event of a costly lawsuit
Types Of Coverage Some Currency Traders May Need
In addition to the policies outlined above, there are a few other types of coverage your currency trader 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.
Professional Liability Insurance
Currency traders sometimes lose money on trades, which is why professional liability insurance may come in handy. This form of insurance can protect your business against lawsuits seeking compensation for losses that came as a result of negligence or errors.
Home-Based Business Insurance
If you work from home, certain work-related accidents and injuries may not be covered by your homeowner’s policy. This insurance gives business owners the means to cover their property and business should something happen while they’re working from home.
Every company with a computer has to worry about data breaches, but currency traders may have additional cause for concern. This form of insurance will provide coverage if you lose sensitive electronic data in a hack.
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.
Steps After Getting Business Insurance
Depending on where you are in your business building process, here are some other actions you may need to take before getting started:
- If you’re just starting, finding the best name for your business is a great first step. Check out TRUiC’s Business Name Generator.
- After finding the perfect name, get a logo with our Logo Generator.
- Every business needs a website. Using a website builder like the GoDaddy Website Builder or Wix makes building a website simple and fast! Check out our review of the Best Website Builder.
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.