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.
Learn more about the risks covered by general liability insurance.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A FARMERS MARKET
Example 1: You leave your supplies on the ground as you take down your tent at the end of the day. As you run with a load of items to your car, a visitor trips over a tent pole and seriously hurts herself. She demands that you pay for her medical expenses or she will sue. A general liability insurance policy would likely cover her medical bills,
Example 2: An employee is hauling large boxes of apples from their car to set up for the day. As he makes his final trip, he loses control of the pushcart, and it crashes into a crowd of visitors. The accident leaves several visitors with serious injuries. If they file a claim against your business, your general liability policy will likely cover your legal fees and any subsequent award settlements.
Example 3: After running a new advertising campaign on your local access station, you receive a call from a competitor accusing you of libel, and they threaten to sue you for damages. General liability insurance will help to pay your legal fees and cover any payouts if you settle out of court.
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.
On average, farmers markets in America spend between $400 - $1500 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.
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 farmers markets should obtain:
Commercial Auto Insurance
Transferring goods back and forth each week is a big part of your job. And to do so, you will probably rely on a number of different vehicles to get the job done. Any vehicles that are used for business purposes should be covered under a commercial auto insurance policy to financially protect your business and your employees in the event of an accident.
Workers’ Compensation Insurance
Workers’ compensation insurance is designed to help cover medical bills and disability benefits if an employee is injured or falls ill in a work-related accident. Most states require any business with part-time or full-time employees to carry this coverage.
In addition to the policies outlined above, there are a few other types of coverage your farmers market 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
There is always a chance that an accident or lawsuit can exhaust your primary insurance limits. If this happens, you could end up having to pay for the remaining damages out-of-pocket. To avoid this issue, commercial umbrella insurance works to go above and beyond your primary coverage and helps to keep your farmers market open for business.
Product Liability Insurance
Whenever you create or sell your products, keep in mind that there is a possibility that one of them could harm to a customer. For example, a customer could claim that your product made them sick and sue you for damages. With product liability insurance, you can rest easy knowing that you have an extra layer of financial protection.
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.
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.