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 GAS STATION
Example 1: While in use, a pump malfunctions and spills fuel at no fault of the customer. The fuel ignites, quickly damaging multiple customers’ vehicles. General liability insurance would likely cover the vehicles’ damage.
Example 2: A customer slips on ice during winter while pumping fuel, and their wrist is fractured in the fall. General liability insurance would likely cover the injury.
Example 3: The hallway to the restroom is regularly used to store overstocked and recently delivered items in tall stacks. A customer who’s walking to the restroom bumps into these stacks and is injured when the products fall. General liability insurance would probably cover the customer’s injuries.
Example 4: General liability insurance may be required to obtain the permits necessary for a gas station.
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 gas station in America spends between $450-$1,000 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 GAS STATIONS 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 gas stations should obtain:
Gas stations normally need commercial property insurance for their building and pumps. Property insurance often also covers items that a business owns and keeps on its property.
Gas stations frequently have expensive build-outs because pumps must be carefully designed and installed. Make sure you have enough coverage to replace both your station’s building and its pumps.
This coverage is often available as part of a business owner’s policy (BOP).
Workers’ Compensation Insurance
Most gas stations need workers’ compensation insurance because they have employees. Workers compensation covers work-related injuries and illnesses, and many states legally require businesses that employ workers to carry it.
Workers’ compensation insurance is usually purchased on its own.
Business Interruption Insurance
Running a gas station comes with many regular expenses, and bills don’t cease after a disaster. Should your gas station have to shut down following a disaster, business interruption insurance may help pay expenses while the station is closed and not bringing in revenue.
Business interruption insurance is widely available as part of a BOP.
Data Breach Insurance
Customers expect to be able to pay at the pump, but accepting card payments exposes a business to potential data breaches. Data breach insurance may provide coverage if customers’ payment information is stolen through skimmers or via another means.
Data breach insurance can be added to a business owner’s policy as an endorsement, as opposed to a stand-alone policy.
TYPES OF COVERAGE SOME GAS STATIONS MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your gas stations 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
A gasoline-fueled fire can quickly cause substantial damage and injury, and resulting lawsuits tend to be expensive. Commercial umbrella insurance offers additional liability protection that might help cover expensive lawsuits like these (and others).
Commercial umbrella insurance can be added to some BOPs.
Liquor Liability Insurance
Though liquor laws and the insurance policies surrounding the sale of liquor vary from state-to-state and situation-to-situation, liquor liability insurance may be needed to protect your assets if your gas station serves or sells alcohol.
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.