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 HEALTH FOOD STORE
Example 1: While delivering health food items to a local restaurant, your driver backs into the restaurant owner, injuring his leg. The owner is suing you for associated medical bills. A general liability policy should cover the cost of his medical bills and other costs associated with the lawsuit.
Example 2: During a rainy day, mud is tracked into the store, causing a customer to slip and fall. He decides to sue your company. Your general liability policy should cover your legal fees, the customer’s medical bills, and any additional damages they are seeking, up to the limits of the policy.
Example 3: Your delivery driver accidentally leaves a customer’s freezer door open, causing the loss of thousands of dollars worth of merchandise. General liability insurance should cover the cost to replace the merchandise and repair the freezer, which broke during the incident.
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, health food stores in America spend 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 health food stores should obtain:
Commercial Property Insurance
Commercial property insurance covers the cost of repairing or replacing property, including owned real estate and equipment, if it is damaged in a covered event. This coverage is typically available as part of a business owner’s policy.
Product liability insurance
Product liability insurance offers protection against lawsuits if customers claim they were harmed by a product that you make or sell. It can cover legal defense fees and any necessary payouts.
Workers’ Compensation Insurance
Workers’ compensation insurance, which covers on-the-job injuries and illnesses, is required by most state if your business has employees. In addition to medical bills, this policy provides you with legal defense and helps support an employee while they are out of work from the injury. Workers’ compensation is generally purchased as a standalone policy.
In addition to the policies outlined above, there are a few other types of coverage your health food 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.
Commercial Umbrella Liability Insurance
General liability insurance will cover the cost of most incidents that your business faces. However, there are certain cases where your general policy’s limits may be reached, like in the event that you lose a big lawsuit. Commercial umbrella insurance will kick in and cover excess damages once your general policy is exhausted.
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.