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 GOURMET POPCORN SHOP
Example 1: An excited child sneaks behind the counter and shoves her hand into the popcorn machine. She sustains burns, and her parents demand that you pay for her medical care. Your general liability insurance will likely cover the child’s treatment costs.
Example 2: One of your customers is entering the restroom when she slips and falls on some water that has recently been spilled on the floor. She hits her head and breaks her wrist. She files a lawsuit against your business, demanding damages. Your general liability insurance will pay for your legal defense in such a situation, including the cost of a settlement if you settle out of court.
Example 3: An employee is carrying a stack of boxes high enough that she cannot see around them. She bumps into one of your customers, knocking her to the ground and causing her injury, including a broken wrist. The customer demands that you pay for her medical treatment. You can likely get financial help from your insurer to pay the medical bills.
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.
The average gourmet popcorn shop in America spends between $500-$1,200 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.
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 gourmet popcorn shops should obtain:
Product Liability Insurance
Because you sell products to the public, you are always at risk of being sued over those products. No matter how careful you are to sell safe products, there is still a possibility that a customer will claim that your popcorn or other products caused him or her injury. If you are sued over a product you sell, your product liability insurance will pay for your legal defense. It will also pay for a settlement if required.
Commercial Property Insurance
You put in a lot of work and capital to get your popcorn business off of the ground. If you were to lose your commercial property in a disaster like a fire, it would be challenging to replace all of it. If your property is destroyed or damaged by a covered event, you can file a claim and get help purchasing new inventory. With the money from your insurance policy, you can get the new equipment and inventory you need to get back to business.
In addition to the policies outlined above, there are a few other types of coverage your gourmet popcorn shop 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
Most states require you to carry workers’ compensation insurance if you have employees. Workers’ comp will pay for medical treatment for employees who have sustained work-related injuries. It will also help pay for lost wages if they cannot work while they recover.
Commercial Auto Insurance
If you have an automobile that you use primarily for business, you need commercial auto insurance to protect you, your property, and your employees. If you or an employee are involved in an accident in the vehicle, your policy will pay for repair or replacement costs and medical treatment for injuries. It would also pay for any legal defense costs you might incur if you faced a lawsuit due to the accident.
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.
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.