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 HOME DECORATOR
Example 1: You are testing out different decorating ideas in a client’s home. One of your ideas includes candles. A candle ignites a curtain, causing a fire that destroys an entire room. Your general liability insurance covers damage to customer property, so you can file a claim and get help paying for the damages.
Example 2: A client is visiting your office to look at some of the materials you are considering for her home. She slips in the bathroom and breaks her hip. She later decides to sue your business. The general liability insurance you carry will pay for your legal defense, including the cost of a settlement if one is required.
Example 3: While you are showing a client around your office, he trips over a stack of boxes and sustains a concussion. He asks that you pay for his medical treatment. Your general liability insurance will likely cover this cost.
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, home decorators in America spend between $400 - $1500 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 home decorators should obtain:
Commercial Property Insurance
All of the equipment and supplies you have invested in to operate your business would be costly to replace if destroyed in an unexpected event like a fire. But with commercial property insurance, you can get help with replacement costs as long as the damage was caused by a covered event.
Professional Liability Insurance
While you strive to do your best for every client, there is always a possibility that one of them will decide that your services caused him or her injury. Professional liability insurance protects against negligence claims due to mistakes or failure to perform. So, if you are sued over such issues, your policy will pay for your legal fees and potential settlement costs.
In addition to the policies outlined above, there are a few other types of coverage your home decorator 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
When the limits of your general liability insurance policy are exceeded—which can happen in certain circumstances, like if you lose a major lawsuit—then you are left paying the remaining damages out of pocket. But if you have a commercial umbrella policy, it will kick in and cover excess costs.
Commercial Auto Insurance
If you have a vehicle that you use primarily for business, you need commercial auto insurance to protect your business and meet your legal obligations. Commercial auto insurance will cover the cost of damages to your vehicle in the event of an accident, as well as the cost of damages to the other vehicle if you cause the accident. The policy will also pay for medical treatment for the injured.
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.