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 STAGING BUSINESS
Example 1: An employee is staging the home of a client. While vacuuming the main living room area, she accidentally sucks up the edge of an antique Persian rug, and a section of it unravels. The damage is going to be extremely expensive to repair, and the rug may need to be replaced. Your general liability insurance policy covers damages your business causes to your customer’s property.
Example 2: A potential client is visiting your place of business to talk to you about staging his home. While walking into your office, he slips on a patch of ice and falls, breaking his arm. Your general liability insurance policy will likely pay for his medical treatment.
Example 3: Employees carrying a large sofa into a client’s home for staging do not see the client’s husband as they are rounding a corner outside of the home. They run directly into him, knocking him to the ground. He sustains a concussion and decides to sue your business. Your general liability insurance policy will cover the cost of your legal defense and a settlement if necessary.
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.
The average home staging business in America spends between $400-$700 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 staging businesses should obtain:
Commercial Auto Insurance
The automobiles that you use primarily for business should be covered by a commercial auto policy. In the event that your vehicle is involved in an accident caused by you or your employees, your commercial auto policy will pay for the damage to your vehicle and any other vehicles in the accident. It will also pay for the medical care for all vehicle occupants injured by the accident.
Professional Liability Insurance
Professional liability insurance covers your company when you are determined to be liable for mistakes or failure to perform. For example, if a client decides that your staging work was responsible for poor sales results and takes legal action against your business, your professional liability insurance would pay for your legal fees.
In addition to the policies outlined above, there are a few other types of coverage your home staging 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 Umbrella Insurance
An umbrella policy will pick up where your general liability insurance policy leaves off. If you are in a situation where your general liability limits are exceeded, like if you lose a big lawsuit, you can rely on your umbrella policy to pay once the general liability policy stops paying, up to the limits of the umbrella policy.
Workers’ Compensation Insurance
If your business has employees, workers’ comp insurance will allow you to help them if they are injured on the job. It pays for work-related injuries, including medical care for treatment and helping with lost wages if the employee is unable to work while recovering.
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.