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 DELIVERY BUSINESS
Example 1: A potential client pays a visit to your office to talk to you about a potential contract for deliveries. He goes to use the restroom but fails to notice a change in the level of the floor and trips and falls. He sustains a broken wrist. Your general liability insurance policy would likely cover the cost of treating his injuries.
Example 2: One of your delivery drivers is in a rush to meet a deadline. He is moving so quickly through your warehouse that he fails to see a visitor and runs into her, knocking her backward to the ground. She requires an ambulance and sues your business for her injuries. The general liability insurance policy you carry will pay for the costs of your legal defense, including the cost of a settlement if you wind up settling the case out of court.
Example 3: A forklift driver in your warehouse is hurrying to move a pallet of goods slated for delivery when he loses control of the forklift and drops the pallet to the ground. The entire order of expensive computer hardware is smashed. Your general liability insurance policy will likely pay for the cost of replacing your customer’s property.
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 delivery business in America spends between $450-$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.
OTHER TYPES OF COVERAGE DELIVERY BUSINESSES 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 delivery businesses should obtain:
Workers’ Compensation Insurance
As an employer, your state likely mandates that you carry workers’ compensation insurance. Your policy will pay for the medical care required to treat work-related injuries sustained by your employees. It will also pay for some of the wages they lose out on when they are unable to work due to work-related injuries.
Commercial Auto Insurance
Your delivery vehicles should be covered by a commercial auto insurance policy. Much like a personal auto insurance policy, the commercial insurance policy you carry will pay for the repair or replacement of a work vehicle involved in an accident caused by you or your employees. The policy will also pay for medical treatment for injuries sustained in the accident and for any damages you or your employees are liable for due to the accident.
TYPES OF COVERAGE SOME DELIVERY BUSINESSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your delivery 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
In the event that your company is required to pay extensive damages—like if you lose a big lawsuit—the limits of your general liability insurance policy may be exceeded. A commercial umbrella insurance policy is designed to pick up where your general liability insurance leaves off so you don’t have to pay the costs out of pocket.
Data Breach Insurance
Data breach insurance, also called cyber attack insurance, is designed to protect your business if you are the victim of a cyberattack. For instance, if your customer information is compromised by a cybercriminal and one or more of your customers takes legal action against your business due to the security breach, your data breach insurance would pay for your legal costs—including the cost of paying settlements, if necessary.
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.