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 FURNITURE STORE
Example 1: One of your employees is bringing in a new load of sofas to the showroom floor when he loses control of the dolly and hits a customer in the back. The customer falls forward, breaking her wrist. She demands that your business pay for her medical treatment. Your general liability insurance will likely cover this expense.
Example 2: The child of a customer is playing with her brother on the bunk beds in your store when she falls to the floor. She breaks her leg, requiring medical attention. The father of the girl sues your business for damages. Your general liability insurance policy would pay for your legal defense, including the cost of a settlement if you settle out of court.
Example 3: The owner of a competing furniture store accuses you of slander and hires an attorney to file a lawsuit. While you disagree that you have slandered his business, you know that you need to hire an attorney to protect your business from the lawsuit. Your general liability insurance will pay for your legal fees when defending yourself against charges of slander, libel, and more. It will also pay for 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 furniture store in America spends between $400-$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.
OTHER TYPES OF COVERAGE FURNITURE STORES 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 furniture stores should obtain:
Workers’ Compensation Insurance
There is always the possibility that one of your employees will sustain an injury from a work-related task. If this happens, your workers’ comp policy will pay for medical treatment for those work-related injuries. It will also pay for some of the lost wages the employee suffers if they cannot work while they are recovering. Most states require workers’ comp for employers, so carrying a policy not only protects your employees, but it also ensures that you meet the legal requirements of your state.
Commercial Property Insurance
Your furniture inventory is the foundation of your business. If you were to lose a major portion of your inventory, or all of it, you might have a difficult time paying to have it replaced. Unexpected events like fires or major storms can occur and cause extensive damage. With commercial property insurance, you can get money from your insurer to replace inventory and other commercial property that was destroyed by a covered event like a fire.
TYPES OF COVERAGE SOME FURNITURE STORES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your furniture store 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
If you are in a situation where your general liability policy limits are exceeded, such as if you lose a lawsuit and are required to pay extensive damages, an umbrella policy would provide additional protection. Without an umbrella policy, your business would be on the hook to pay damages that exceeded those paid by your general liability insurance. But with an umbrella policy, the extra policy would kick in when the general liability insurance limits are reached so you would not have to cover the excess damages out of pocket.
Commercial Auto Insurance
Commercial auto insurance is required for any automobile you use primarily for business. For instance, if you have a delivery vehicle for furniture, you should carry commercial auto. Your policy will cover damages if your vehicle is involved in an accident. If your driver caused the accident, your policy will pay for the damages to the other vehicles and for medical care for the injured. Your state likely requires that you carry commercial auto insurance if you have a vehicle for work.
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.