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 UPCYCLING BUSINESS
Example 1: One of your employees is hauling a load of furniture on a hand truck to put into the car of a customer. He loses control of the load, and it rolls rapidly downhill to strike another customer’s luxury sedan. Your general liability insurance policy is designed to cover damage to customer property.
Example 2: The new logo you had made for your business represents your company perfectly, so you begin to use it on all your marketing materials. Unfortunately, another company feels your logo is too similar to theirs and files a lawsuit against your business. The general liability insurance coverage you have will pay for your legal defense in such a situation, as well as for any payouts or settlements if they are necessary to resolve the case.
Example 3: A visitor to your business is checking out your renovation process for furniture. An employee accidentally drops one end of a heavy sofa on the visitor’s foot. He sustains several broken bones that require medical care. He demands that your business pays for his medical treatment since the accident happened in your place of business. Your general liability insurance would likely cover this cost.
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 upcycling 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.
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OTHER TYPES OF COVERAGE FURNITURE UPCYCLING 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 furniture upcycling business should obtain:
Commercial Property Insurance
You put a lot of money into acquiring your tools, equipment, supplies, and the various pieces of furniture you are upcycling. If you were to lose all of these things, such as in a fire, they would be expensive to replace. But with commercial property insurance, you do not have to cover the costs all on your own. You can file a claim with your insurer to get funds for replacements so you can quickly get back to business.
Product Liability Insurance
The furniture that you upcycle and sell to customers could put you at risk of certain liabilities. For example, if a customer gets hurt while using a piece of furniture you sold and then files a lawsuit against your company, you could face expensive legal bills. To avoid needing to pay for your own legal costs out of pocket, it can be quite helpful to have a product liability insurance policy to protect your business. If you have product liability insurance, your policy will pay for your legal costs, including any potential settlements.
Commercial Auto Insurance
You will likely have a truck or other vehicle to pick up and transport furniture. Most states require businesses to carry commercial auto insurance policies if they have vehicles they use primarily for business. But there are more benefits than just meeting the legal requirements of your state. Your commercial auto policy will pay for property damage and medical treatment in the event of an auto accident.
TYPES OF COVERAGE SOME FURNITURE UPCYCLING BUSINESSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your furniture upcycling 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
If you have employees at your upcycling business, you need workers’ compensation insurance to protect both them and your business. It protects your employees by covering the cost of medical treatment for work-related injuries and by helping to pay for lost wages while they recover from those injuries. It protects your business by ensuring that you meet the likely legal mandate of your state that employers carry workers’ comp.
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.