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 FLOOR INSTALLATION BUSINESS
Example 1: You have removed the old floor but have not installed the new flooring yet. The client tries to enter the property and falls due to uneven footing. They file a legal claim against your business. Your general liability policy will cover your legal defense costs, including the cost of a settlement if the case is decided out of court.ry.
Example 2: One of your employees loses control of a dolly while moving tiles from a truck to the property. The heavy boxes of tiles fall on the client’s elaborate landscaping, smashing lighting installations and exotic plants. The general liability policy you carry will likely cover the replacement and repair costs for the damage done to the client’s property.
Example 3: A competitor claims that you are using a logo that is too similar to theirs and takes legal action against your business. Your general liability policy will cover the costs of your legal defense and the costs of paying damages to the competitor if you are found liable, up to your policy limits.r.
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.
The average floor installation business in America spends between $500-$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.
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 floor installation businesses should obtain:
Commercial Auto Insurance
Getting your employees, installation equipment, and flooring materials to the job site requires company vehicles. Every vehicle that is used for business purposes should have commercial auto insurance. The commercial auto policy you carry will help you meet legal requirements while also providing financial assistance in the event of an accident.
Commercial Property Insurance
Damage to your commercial property, such as tools, equipment, and flooring supplies, can be extremely expensive. Whether it is a fire or another situation that leads to extensive property loss, your commercial property insurance coverage will mitigate the financial burden to your business by helping cover the costs of replacement.
In addition to the policies outlined above, there are a few other types of coverage your floor installation 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
Installing flooring is hard work. Injuries can happen at any time, whether from heavy lifting, power tool use, improper use of chemicals, or other accidents. A workers’ compensation policy helps you to cover the costs of workplace-related injuries and lost wages when an employee is unable to work due to injuries or illnesses suffered at work. Carrying workers’ compensation insurance is typically required by law, although specific laws vary by state.
Commercial Umbrella Liability Insurance
A general liability insurance policy has specific limits that may not be high enough to cover the costs required to protect your business. Commercial umbrella liability insurance is designed to supplement general liability insurance. If you find yourself in a situation where the damage is significant enough to exceed your general liability policy, commercial umbrella liability insurance will help to pick up the slack.
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.