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 GROCERY STORE
Example 1: The walkway into the grocery store is covered with ice, leading to a customer falling and injuring their head. General liability insurance may cover the medical bills for the injured customer as well as any other claims related to the incident from a lawsuit. It may also cover any settlements from the case.
Example 2: A customer purchases fresh chicken, eats it, and suffers an illness from food poisoning. The grocery store’s in-house butcher prepared the product but failed to follow proper sanitation rules, leading to the illness. The general liability insurance policy is likely to cover the losses associated with the customer’s medical bills, lawsuits filed against the company related to the incident, and settlements related to it.
Example 3: A customer uses a curbside-pickup service offered by the grocery stores, but an employee mistakenly pushes a grocery cart against the vehicle, creating a significant dent to the vehicle, requiring replacement of the vehicle’s side panel. The general liability insurance policy may help cover the costs associated with the repairs.
Example 4: A manager accuses a shopper of stealing, searches their bags, calls the police, makes claims to other customers that the theft occurred, and documents the incident. The police find no evidence of the crime, and surveillance video shows the manager was wrong. Still believing the manager is right, employees take to social media. The individual’s employer questions him. Even though he did nothing wrong, his reputation suffers harm. This could be considered slander if there is financial damage as a result. General liability insurance may help cover these losses.
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 grocery store 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.
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OTHER TYPES OF COVERAGE GROCERY STORES 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 grocery stores should obtain:
Commercial Property Insurance
Nearly all grocery stores require commercial property insurance to aid in covering the building itself. This type of policy may also help cover equipment, inventory, and computer systems. It may also help cover expenses in the event of a fire or weather event. A simple storm could cause a wide range of damage to the building, putting inventory and equipment at risk. Most often, commercial property insurance is a component of a business owner’s policy (BOP). Any building owned by the company may benefit from this coverage.
Workers' Compensation Insurance
Grocery stores employing individuals may need workers’ compensation insurance. Some states require it if the location has a specific number of employees. However, it can help minimize financial loss to a company of any size. It provides coverage for on-the-job injuries. Employees may suffer injuries from using equipment or falling on wet surfaces. This policy can help to cover medical bills, lost time at work, and other associated financial losses.
TYPES OF COVERAGE SOME GROCERY STORES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your grocery store 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
Grocery stores provide an important service to the community, making their operation valuable. A fire or other covered incident, though, can leave the location unable to operate for a significant length of time as repairs take place. Yet, they have financial obligations to vendors and employees during that downtime. Business interruption insurance may help cover those costs as well as cover a move to a secondary location if deemed beneficial. It can help the organization to minimize loss during this time and maintain both employee and vendor contracts.
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.