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 GO KART COMPANY
Example 1: As one race finishes, the next group of drivers is queuing up to take their places. One of the drivers steps out onto the track early because the gate wasn’t properly locked, and they are hit by a go kart. General liability insurance will likely pay for medical bills associated with the accident and any other damages awarded as the result of a lawsuit.
Example 2: After finishing repairing your go karts, an employee lowers the vehicle out of the repair shop bay and accidentally smashes into a customer’s car, ripping off the front bumper and smashing a headlight. General liability insurance will likely pay for the damages to your customer's car and any repairs to the damaged lift.
Example 3: As your team is cleaning the lobby after a party, one of the guests returns for a forgotten bag and trips over an extension cord. They break their wrist in the fall and sue you for damages. General liability coverage will likely pay for any damages awarded.
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 go kart company 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.
OTHER TYPES OF COVERAGE GO KART COMPANIES 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 go kart companies should obtain:
Workers’ Compensation Insurance
Operating a go kart track can be very risky, and if an employee is injured while working, workers’ compensation coverage will pay for their medical bills. This important insurance coverage is required in many states if you have full-time or part-time employees.
Commercial Auto Insurance
Any vehicles that are used for business purposes must be covered under a commercial auto insurance policy. If another person is injured or you damage someone else’s property in your company car, your personal car insurance policy will not cover any of the associated damages.
TYPES OF COVERAGE SOME GO KART COMPANIES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage go kart company 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.
Business Interruption Insurance
It is common for businesses to have to close down operations after a fire, flood, or acts of theft and vandalism. If this happens to you, business interruption insurance can help to cover the loss of revenue during this time and ensure that you can reopen for business as soon as possible.
Commercial Umbrella Liability Insurance
If there is an accident at your go karts park that results in a big lawsuit, your primary insurance policies can easily be exhausted. In these types of situations, commercial umbrella liability insurance can step in to go above and beyond your primary coverage limits to protect your business and keep things up and running.
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.