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 THEATER INSTALLATION BUSINESS
Example 1: You are installing a home theater and accidentally cause damage to a wall and the wood flooring. General liability insurance will cover the cost to repair or replace the client’s damaged property.
Example 2: A month after installing a new television, the home burns down in a fire. The origin traces back to your work. Your general liability policy should cover the cost to replace the home, the claimant’s personal property, and any other damages awarded to the third party as a result of your work. Should someone bring a lawsuit against you, your insurance carrier will pay your legal fees.
Example 3: One of your promotional social media posts implies that your competition does not provide quality service. The company has named your business in a defamation lawsuit, claiming their business has suffered as a result. A general liability policy will pay your legal team and damages awarded by the court.
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 theater installation businesses in America spend between $500 - $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.
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 theater installation businesses should obtain:
Commercial Property Insurance
Commercial property insurance indemnifies the insured when a covered loss occurs. It pays for the repair or replacement of the physical property, as well as the business property kept onsite.
Businesses can purchase commercial property insurance as part of a business owner’s policy (BOP). Owners should discuss coverages and exclusions with their insurance agent to identify any coverage gaps. Most commercial property policies exclude business property taken off premises without the properly added endorsements. In some instances, a separate Inland Marine policy may be necessary.
Commercial Auto Insurance
The home theater industry requires employees to travel from one job site to another. Since personal auto policies exclude business vehicles, owners must purchase a commercial auto policy for business vehicles. In the event of an accident, the policy would cover the cost to repair your vehicle, as well as any auto liability claims that may arise from an accident.
Businesses can purchase commercial auto insurance with a business owners’ policy (BOP) or as a standalone policy, depending upon the carrier.
In addition to the policies outlined above, there are a few other types of coverage your home theater installation 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.
Workers’ Compensation Insurance
State law requires that businesses carry workers’ compensation insurance on all employees. When an employee’s work causes illness or injury, the policy can pay for medical treatment and lost wages while he/she is recovering.
Workers’ compensation is typically purchased as a standalone policy.
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.