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.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A HANDYMAN BUSINESS
Example 1: An employee drops a window while working in a customer’s home, shattering the window and damaging their new wood floors. General liability insurance would cover the cost to replace the window and floors.
Example 2: While meeting about an upcoming project, your client trips over a can of paint and breaks an arm. If you’re found liable, general liability insurance would cover her medical bills.
Example 3: Someone overhears you and your colleague talking negatively about a client and informs that client, who sues you for slander. General liability insurance would cover your legal expenses and any resulting payout to the client.
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.
On average, handyman businesses in America spend between $500 - $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.
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 handyman businesses should obtain:
Home-Based Business Insurance
Since an office is unnecessary for this type of business, you may choose to operate out of your home. If your home suffers a loss or a client has an accident during a meeting there, you may find you’re underinsured or uninsured through your existing homeowners insurance policy. Home-based business insurance fills in those gaps, protecting against losses a standard homeowners policy excludes.
You can typically purchase home-based business insurance as a part of a business owners policy (BOP). For an additional premium, some homeowners insurance providers offer this coverage as a rider (extension of coverage).
Workers’ Compensation Insurance
If you have employees, you likely need this coverage because most states require businesses to carry workers’ compensation insurance for their part-time and full-time staff. This coverage protects your 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 work-related accident.
While many states allow business owners to exclude themselves, consider including yourself in your policy if you’re directly involved in day-to-day business operations.
You can typically purchase workers’ compensation insurance as a standalone policy.
In addition to the policies outlined above, there are a few other types of coverage your handyman 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 an accident while traveling to and from client sites, your personal auto policy may exclude that loss. A separate commercial auto policy helps fill that coverage gap, and each state mandates the minimum levels of auto coverage for all vehicles that operate on public roadways. Most often, those minimums only offer basic protection, leaving you underinsured in the event of a loss so consider purchasing limits greater than those required by state law.
You can typically purchase commercial auto insurance as part of a business owners’ policy (BOP) or as a standalone policy.
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.