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 HOME CARE BUSINESS
Example 1: While simultaneously cooking dinner and attending to a client’s personal needs, an employee forgets about a pan on the stove. A grease fire eventually erupts, and it quickly spreads to other parts of the house. General liability insurance would likely cover the property damage and any related legal costs.
Example 2: A caregiver leaves their bag at the top of the stairs, and a client trips over it while trying to go downstairs. The client sustains multiple injuries that require medical attention. General liability insurance would likely cover the client’s injuries.
Example 3: An advertising campaign claims that your home care business is the “best” in the region, but this claim isn’t backed by any empirical data. A competitor files a defamation lawsuit. Regardless of the outcome of the suit, general liability insurance would typically cover corresponding legal costs.
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 home care business in America spends between $400-$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.
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OTHER TYPES OF COVERAGE HOME CARE BUSINESSES 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 home care businesses should obtain:
Commercial Auto Insurance
Your business needs to insure any vehicles that it uses to drive to and from clients’ sites. Commercial auto insurance is required, as personal auto policies aren’t designed to protect against the increased risk that comes with work-related driving.
Commercial auto insurance can be acquired as part of a package policy or by itself.
Professional Liability Insurance
Professional liability insurance is used to protect skilled workers from potential liability lawsuits that might be filed if they make a mistake while working. The insurance usually covers legal fees, settlements, and judgements associated with error-related lawsuits.
While providing in-home care is often routine, a mistake can potentially have devastating consequences. For example, a dropped patient may suffer severe injuries.
Professional liability insurance can be obtained in many package policies as well as in a standalone policy.
TYPES OF COVERAGE SOME HOME CARE BUSINESSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your home care 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.
Home-Based Business Insurance
If you manage the logistics of your home care business from a home office, getting home-based business insurance is appropriate. Business activities conducted at home are not normally covered by standard homeowner’s insurance policies, but they are usually are covered by this insurance.
Home-based business insurance might be included in a business owner’s policy (BOP) or procured through a standalone policy.
Workers’ Compensation Insurance
If your business employs home care providers, plan on getting workers’ compensation insurance. The coverage protects workers in the event that they’re injured on the job, which can happen easily when employees are lifting and otherwise assisting patients. Additionally, state law generally requires employers to carry the coverage.
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.