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 DRY CLEANING BUSINESS
Example 1: Some children are playing inside your building, and one of them climbs into a washing machine, which ends up activating with the child inside. In the event your business is found liable for injuries to the child, general liability insurance would likely help to cover whatever you owed or any settlement reached regarding the accident.
Example 2: A malfunctioning washing machine leaks water onto the floor, leaving an untended pool in the middle of the front walkway. A customer slips on the water and sustains a serious injury. If liable, your company would probably be covered through general liability insurance for damages owed or settlements reached.
Example 3: A customer’s expensive collection of professional outfits is badly damaged by a malfunctioning dryer, costing her thousands in replacement expenses as well as compromising her appearance in an upcoming business event that afternoon. If liable for damages, general liability insurance could probably assist in covering anything you owed per a court’s ruling or a settlement between your business and the plaintiff.
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 dry cleaning business 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.
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OTHER TYPES OF COVERAGE DRY CLEANING 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 laundry and dry cleaning businesses should obtain:
Commercial Property Insurance
Unquestionably, dry cleaning businesses require coverage for their expensive and hard-to-replace/repair commercial property. Dry cleaning businesses are stocked with machinery for the efficient cleaning and drying of clothing, and disasters like fire or violent weather could compromise a business’s assets, leaving it with massive replacement or repair costs. Protect your equipment and any owned real estate with a commercial property policy. When covered disasters strike, a policy like this can be the difference between bankruptcy and a challenging hurdle.
Professional Liability Insurance
Professional liability policies are suited for businesses that perform careful, professional services with potentially significant consequences. When all goes well, customers are grateful and satisfied. But if your services are provided without the proper care, or an employee suffers a lapse in professional judgment, some serious issues can arise. If your process renders a customer’s garments unusable through poor professional decision making, this policy will help to cover expensive damages and prevent your business from going into the financial red zone.
TYPES OF COVERAGE SOME DRY CLEANING BUSINESSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your dry cleaning 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.
Business Interruption Insurance
What can a business do against catastrophes like fires and tornadoes? Forces of nature come and go as they please, wrecking the products and leveling businesses in a fraction of the time it took to build them. Fortunately, there is business interruption insurance to assist companies in recouping estimated profit losses during times of hardship.
When disaster puts a halt to your business operations, this policy may even cover the costs involved in temporarily relocating or training new employees to use complex machinery. Together with a commercial property policy, this insurance can keep a business afloat during hard times.
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.