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 AN EVENT PLANNER
Example 1: A customer is walking into your office and doesn’t see a patch of ice outside your entryway. He slips and breaks his arm. He takes legal action against your business, holding you responsible for his injuries. The general liability insurance policy you carry will pay for your legal fees when defending yourself against such a lawsuit. If you settle outside of court, your policy will pay for the settlement as well.
Example 2: One of your employees has a hand cart loaded with foldable tables that he is transferring from one part of your building to another. In his haste, he fails to notice a potential client visiting your business and hits her with the hand cart. She falls down and sustains serious injuries. Your general liability insurance policy would likely cover the costs of her treatment.
Example 3: You are happy with the new logo for your business and begin to use it in all of your promotional materials. Unfortunately, one of your competitors feels like the new logo is too similar to his own logo and files a lawsuit against your business over the issue. Because you have a general liability insurance policy, your legal defense fees in this situation would be covered by your insurer, as well as any settlement costs.
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 event planner in America spends between $500-$1,100 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 EVENT PLANNERS 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 event planners should obtain:
Professional Liability Insurance
Also known as omissions and errors insurance, professional liability insurance is tailored to your particular business to protect you against negligence claims due to mistakes or failure to perform. Although you do your best to plan events to meet or even exceed the expectations of your clients, there are still times where things do not go according to plan. If a client takes legal action against your business due to a mistake, your professional liability insurance will cover your legal fees and the cost of a settlement if one is necessary.
Commercial Auto Insurance
Any vehicle you use primarily for business needs commercial auto insurance. The automobile you use to travel from client to client and event to event should have coverage so that you are meeting the legal mandate of your state for commercial vehicles. With this coverage, you or your employees will be protected if you get into an accident in the vehicle. If you or an employee cause an accident, the policy will help pay for repairs or replacement of the vehicle as well as any damage caused by your vehicle to other vehicles. It will also pay for medical care for the injured.
TYPES OF COVERAGE SOME EVENT PLANNERS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your event planning 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.
Workers’ Compensation Insurance
Most states require that businesses with employees carry workers’ compensation insurance. Your workers’ comp insurance will cover your employees if they are injured performing work-related duties. For instance, if an employee is carrying folding tables to an event and sustains a back injury, she can get medical care through workers’ comp. If she is unable to work, workers’ comp insurance will help pay her lost wages while she is recovering.
Commercial Umbrella Insurance
The general liability insurance policy you carry offers a great foundation to protect your business, but there are circumstances where your general liability policy limits can be exceeded. For example, if your company is sued and you lose the lawsuit, the damages you are required to pay could exceed your coverage limits. If you have commercial umbrella insurance, your umbrella policy will pick up where the general liability policy leaves off.
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.