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.

Learn more about the risks covered by general liability insurance.


Example 1:  While an employee changes several in-store displays, a customer enters your store, trips over the leg of a hat display, breaks an arm, and decides to sue your business for damages. General liability insurance would pay for your legal fees and any court-awarded damages.

Example 2:  As your team sets up at a local art market, one of the displays falls over and breaks a neighboring business’ entire table of pottery. General liability insurance would cover the damages sought by the other business owner. 

Example 3:  You plan to open a second location across town and, as part of the loan terms, your bank requires evidence of general liability insurance for at least $1 million. A general liability policy would fulfill that obligation.

Example 4:  After the launch of your new online store, you discover one of the photos on the site is under copyright and the image’s owner sues your business for copyright infringement. General liability insurance would cover your legal fees and any payout awarded to the claimant.

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

On average, haberdasheries in America spend between $350 - $750 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:

Graph showing average price of general liability insurance prices per industry

Several factors will determine the price of your policy. These include your:

  • Location
  • Deductible
  • 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 Haberdasheries 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 haberdasheries should obtain:

Workers’ Compensation Insurance

Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. This coverage protects your delivery drivers and other employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover but also any disability or death benefits stemming from a workplace accident.

You can typically purchase workers’ compensation insurance as a standalone policy. 

Commercial Property Insurance

Whether you own or rent your retail space, you should include this coverage in your insurance portfolio. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property. This includes your inventory, professional tools, and any business-owned buildings.    

You can typically purchase commercial property insurance as part of a business owners policy (BOP).

Product Liability Insurance

Product liability insurance offers protection to businesses that manufacture, supply or sell products. If a customer names your company in a lawsuit because they claim your product injured them in some way, product liability insurance would cover your legal fees and any required settlement,  

You can typically purchase this coverage as part of a business owners policy (BOP).

Types Of Coverage Some Haberdasheries May Need

In addition to the policies outlined above, there are a few other types of coverage your haberdashery 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

If you need to close your store temporarily to make repairs after a fire, tornado, or other unexpected events, business interruption insurance helps cover some of your expenses and lost revenue until you reopen. 

You can typically purchase this coverage as part of a business owners policy (BOP).

Data Breach Insurance

Recent reports name retailers as the biggest target for online hackers. This coverage — also known as cyber attack insurance — protects your business from liability if a cybercriminal hacks into your computer system, steal sensitive customer data, and your customers sue you for damages. In the event of such a lawsuit, data breach insurance would cover your legal fees and any settlement payouts.

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.