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 GIFT WRAPPING BUSINESS
Example 1: A customer is bringing in a stack of boxes for your team to wrap. She does not see a change in the level of the floor and trips, falling with all of her packages. Not only does she break her arm in the fall, but some of her expensive gifts as well. Your general liability insurance policy would likely cover the cost of her medical treatment and the replacement of her property.
Example 2: One of your employees is trying to keep up with the holiday rush. She overloads a handcart with packages to take from one part of the building to the other. In her hurry, she runs the hand cart into an obstacle and spills the packages onto the hard floor. The contents of multiple packages are smashed, including a number of expensive electronics. Your general liability insurance policy will likely cover the cost of replacing the property of your customers.
Example 3: The new logo you have purchased from a local artist is a hit with you, your employees, and your customers. Unfortunately, one of your competitors feels like the logo is too similar to her own logo, and she hires an attorney to sue your business over it. Your general liability insurance policy will pay for your legal fees in the event of a lawsuit against your company. It will also pay for any payouts or settlements if they are required.
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 gift wrapping business 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 GIFT WRAPPING 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 gift wrapping businesses should obtain:
Workers’ Compensation Insurance
Most states require businesses with employees to carry workers’ compensation insurance. The policy that you carry for your employees will cover them should they become injured while performing job-related duties. For example, if an employee is climbing a ladder to access some wrapping materials on a high shelf and falls, workers’ comp would pay for the treatment of her injuries. It would also pay for some of the wages she loses while being unable to work.
Commercial Property Insurance
The various supplies and equipment you have purchased to make your gift wrapping business operational required a significant investment on your part. If an unexpected event like a fire were to destroy most or all of your supplies and equipment, it may be difficult to pay for replacements out of pocket. But with a commercial property insurance policy, you will not be forced to pay for it all on your own. Your policy will help to cover the costs of replacements, allowing you to get back to doing business sooner rather than later.
TYPES OF COVERAGE SOME GIFT WRAPPING BUSINESSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your gift wrapping 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.
Commercial Auto Insurance
If you have one or more vehicles that you use primarily for business purposes, you need to have commercial auto insurance. Much like your personal auto insurance policy, commercial auto insurance provides financial protection for your commercial vehicles. In the event of an auto accident caused by you or one of your employees, your policy will help to cover the cost of repairing or replacing the vehicle and the vehicle of any other parties hit by your vehicle. It will also pay for medical treatments for injured parties.
Commercial Umbrella Insurance
An umbrella insurance policy is designed to pick up where a general liability insurance policy leaves off. Every general liability insurance policy has limits to what it pays out—once those limits are exceeded, the umbrella policy takes over to cover damages. Events that can exceed general liability insurance policies can include things like expensive lawsuits. Were your business to lose a lawsuit, the damages you were required to pay could exceed your general liability insurance policy. At that point, you could depend on your umbrella policy to take over.
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.