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 DANCE STUDIO
Example 1: During your spring production, one of the dancers misses their cue on stage and must enter from the back of the curtain to step in time. Unfortunately, this area isn’t cleared for dancers, and the performer trips over a cord, breaking their arm in the fall. General liability coverage will likely help to cover any damages in a lawsuit.
Example 2: While stretching on a ballet barre, one of your students lifts their leg up only to come crashing down as the barre is ripped out of the wall. The student sustains a serious leg injury that requires surgery to repair. General liability insurance will likely pay for their medical expenses and any other damages.
Example 3: As your team sets up the stage for a performance, a group of parents is touring the studio. One of the parents goes out onto the stage just as a light falls from the scaffolding. The parent is hit in the shoulder and needs surgery for their injuries. General liability insurance will likely pay for their surgery and any other damages awarded in a lawsuit.
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 dance studio in America spends between $300-$600 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 Dance Studios 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 dance studios should obtain:
Commercial Property Insurance
If you own the building that your dance studio operates from, you should carry a commercial property insurance policy. This type of insurance coverage will help to not only protect the physical building in the event of an accident or natural disaster but the business-related equipment inside as well.
Workers’ Compensation Insurance
Most states require that businesses with part-time and full-time employees carry workers’ compensation insurance. This coverage will pay for an employee’s medical bills if they are ever injured or become ill while performing their job duties.
Types Of Coverage Some Dance Studios May Need
In addition to the policies outlined above, there are a few other types of coverage your dance studio 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
Any vehicles that are used for work-related duties must be covered under a commercial auto insurance policy. Personal car insurance will not pay for any injuries or third-party damages associated with an accident involving a company vehicle.
Commercial Umbrella Liability Insurance
Operating a dance studio comes with many different risks, and if your primary insurance policies are exhausted following a lawsuit, commercial umbrella liability coverage works to go above and beyond those primary limits. This can help to prevent your business from closing down due to particularly high legal costs.
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.