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 DENTAL OFFICE
Example 1: One of your patients is walking to the restroom when she slips on a wet spot on the floor and falls. She breaks her wrist and demands that you pay for her medical treatment because the wet area was not marked. Your general liability insurance would likely cover this cost.
Example 2: You have begun to use a new logo for your dental business that you really like. Unfortunately, one of your competitors decides that it is too similar to his logo and files a lawsuit against your business. With general liability insurance, you have protection against such lawsuits. Your insurer will pay for your legal defense costs, including the cost of a settlement if you need to settle out of court.
Example 3: One of your dental assistants is late to work and comes rushing in the back of the building. In her haste, she does not see a patient and knocks her over. The patient sustains a concussion and sues your business over the accident. Your general liability insurance will pay for your legal fees, including the cost of an attorney and the cost of a settlement if one is 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.
COST OF GENERAL LIABILITY INSURANCE
The average dental office in America spends between $350-$750 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 DENTAL OFFICES 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 dental offices should obtain:
Professional Liability Insurance
As a dentist, you regularly give professional advice and perform duties related to your professional training and certifications. Professional liability insurance protects you from negligence claims based on mistakes or failure to perform. If a patient sues you, claiming that your treatment caused them harm, your policy would pay for your legal defense and for a settlement if you settle out of court.
Commercial Property Insurance
The dental equipment and supplies you have invested in would be costly to replace if you were to lose it in a fire or similar event. With commercial property insurance, you can file a claim with your insurer and get financial help with replacement costs as long as the loss was caused by a covered event.
TYPES OF COVERAGE SOME DENTAL OFFICES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your dental office 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.
Workers’ Compensation Insurance
Most states require employers to carry workers’ compensation insurance. If an employee is injured while working, they can get their medical treatment paid for through workers’ comp. It will also cover some lost wages while they take time off to recover from their injuries.
Commercial Umbrella Insurance
The general liability insurance policy you carry will be sufficient for most circumstances, but it is possible that the limits of your policy could be exceeded—like if you lose a major lawsuit. But if you have commercial umbrella insurance, you have the extra protection that kicks in when the general liability insurance stops paying. If your general liability insurance limits are reached, the umbrella policy pays for the remaining damages.
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.