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 HAUNTED HOUSE
Example 1: A customer walking through a haunted attraction touches a live wire that wasn’t properly installed and suffers significant burns and electrical shock that require emergency medical attention. General liability insurance most likely would cover expenses related to the event, including medical fees and any legal suit filed against the business.
Example 2: As a touring visitor enters the haunted house, an employee reaches out to grab him, mistakenly touching the visitor and causing him to drop an expensive camera. General liability insurance may help cover the cost of the camera, depending on the value.
Example 3: A person walking through a haunted display has a stage prop fall on them. They fall and hit their head. While they don’t seem to have any medical emergency, the haunted house calls an ambulance to be on the safe side. Liability insurance helps cover losses related to any medical expenses and any lawsuits filed against the company.
Example 4: A touring customer fails to sign a liability waiver before entering the attraction, gets scared, and suffers a medical emergency on site. This could fall under general liability insurance if the employee’s failed to ensure that a waiver was signed, leading to a settlement for damages in a lawsuit. A liability waiver will only go so far in a court case. In short, the company can still be sued even if a waiver is signed.
Example 5: The haunted house owners use a term or phrase in their marketing materials that is a copyright infringement of another location. General liability insurance may cover the damages from a copyright infringement lawsuit.
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 Haunted House in America spends between $300-$800 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 HAUNTED HOUSES 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 haunted houses should obtain:
Commercial Property Coverage
If you own the building the haunted house will operate in or the land you will set up the attraction on, having commercial property insurance is necessary. It aids in protecting the building itself as well as the attraction features from various types of risks. In a haunted house, each attraction, from the walls to props, are vital to the operation of the business. Minimizing damage to any equipment is also important.
Workers’ Compensation Insurance
Most haunted houses employ numerous individuals. Some are placed in dangerous situations where they can slip and fall or suffer another injury. Workers’ compensation covers on-the-job injuries and illnesses to employees and minimizes financial loss.
TYPES OF COVERAGE SOME HAUNTED HOUSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your haunted house 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 Umbrella Insurance
Damages from an incident can be significant. For example, a customer suffering a hit to the head after tripping on the floor in the dark could potentially lead to an expensive lawsuit and settlement. Commercial umbrella insurance may help to defray those costs. It extends the amount of liability coverage beyond what the general liability insurance plan offers. It applies only when the limit of the general liability policy is exceeded.
Commercial Auto Insurance
Some haunted houses also use vehicles as a part of the attraction. A haunted forest or farm, for example, may pull employees through a field. These vehicles, whether they are high-powered tractors or full trucks, are valuable investments for the company. Because they are being used as a part of the business operation, companies should consider covering them with commercial auto insurance. This helps protect the vehicle’s value if an accident occurs and minimizes general liability claims.
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.