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 HOOKAH LOUNGE

Learn more about the risks covered by general liability insurance.

Example 1:  A customer with norovirus uses your hookah, and after which the mouthpiece is not properly cleaned. If there’s an epidemic of norovirus that breaks out due to your hookah lounge, you can use general liability insurance to cover claims that arise.

Example 2:  A small business in the area sues you because your name closely resembles theirs. Your general liability coverage protects you from having to pay the full legal costs in the event of a serious lawsuit.

Example 3: While dropping off a vehicle at an auto shop, you accidentally back the customer’s vehicle into the garage bay door. General Liability Insurance would cover the damage to the customer’s vehicle and the auto shop’s garage door.

Example 4:  Your landlord requires you to have general liability as a condition of renting out the space. General liability can help you get the location you want to ensure your business’ success.

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 hookah lounge in America spends between $500-$1,100 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:

Graph showing average price of general liability insurance prices per industry

Several factors will determine the price of your policy. These include your:

  • Location
  • Deductible
  • 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 Hookah Lounges 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 hookah lounges should obtain:

Property Insurance

For hookah lounges that own their own space, property insurance is available to protect the grounds and building from natural disaster and criminals alike. This insurance will provide the funds to rebuild or repair the land so that business owners won’t have to pay a handyman or construction company from their own profits.

Business Interruption Insurance

Business interruption insurance covers businesses that need to close for an extended period of time. So if an electrical fire causes the business to be closed for 3 months while being repaired a business owner has a way to recoup some of the income that they will lose due to the closure. Hookah bars are dependent on the foot traffic they receive, so this type of insurance can help owners stay afloat while they wait for the repairs to conclude.

This coverage is generally offered in a Business Owners’ Policy (BOP)

Types Of Coverage Some Hookah Lounges May Need

In addition to the policies outlined above, there are a few other types of coverage your hookah lounge 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

If your hookah lounge has any employees (full-time or part-time), you are legally required to carry workers’ compensation insurance. This type of coverage will help compensate your employees in the case that they get injured on the job.

Commercial Umbrella Insurance

Umbrella coverage allows you to extend above and beyond the standard limits of your other business insurance policies. If you are faced with a large lawsuit or other claim situation, there’s a possibility that the coverage limits of your standard policies will be insufficient. In this case, your umbrella policy will allow you to surpass these limits.

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.