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.
Learn more about the risks covered by general liability insurance.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A HOUSE SITTER
Example 1: As part of your house sitting duties, you’re responsible for ensuring the water level on their pool remains at a certain level. You forget for a few days, and the pump breaks due to low water levels. The client is asking you for financial compensation to replace the water pump. General liability insurance will pay for the replacement, as well as your legal fees if the customer decides to sue.
Example 2: You spill a glass of wine on the client’s new couch and they are suing you for the replacement cost. Your general liability policy should cover your attorney’s fees and the compensation claim.
Example 3: You have decided to expand your business and are seeking a loan to get you started. As part of the terms of the loan, the bank requires evidence of at least $1 million in liability. General liability insurance ensures you meet that requirement.
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
On average, house sitters in America spend between $350 - $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.
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Other Types of Coverage house sitters 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 house sitters should obtain:
Workers Compensation Insurance
State law requires that business owners carry workers compensation insurance on all payrolled employees. In the event of an on-the-job injury or illness, it pays their medical bills and lost wages while out of work. If the incident leads to a lawsuit, the policy would also cover the business owner’s legal fees.
You can purchase workers compensation insurance as a standalone policy.
Commercial Property Insurance
In the event of a covered loss, commercial property insurance pays to repair or replace business-owned property, including the building and its contents. To ensure protect business asset protection, this coverage should be part of every company’s insurance portfolio.
Commercial property insurance is generally purchased as part of a business owners’ policy (BOP).
Types of Coverage Some house sitters May Need
In addition to the policies outlined above, there are a few other types of coverage your house sitter 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.
Business Interruption insurance
If you are like most entrepreneurs, you rely on consistent revenue to keep the business running. But, what if you experienced a loss that closed your doors for an extended period of time? Business interruption insurance helps protect the company during the shutdown, offering a percentage of the revenue lost.
This insurance is generally offered as part of a business owners’ policy (BOP) package.
Commercial Umbrella Liability Insurance
House sitting offers a very personal service. With employees entering the clients’ homes on a regular basis, it only makes sense to have as much protection as possible, particularly when it comes to liability risks. A commercial umbrella policy provides an additional layer of liability coverage, above and beyond the limits of the underlying general liability policy.
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.