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 HUMAN RESOURCES CONSULTING FIRM
Example 1: While visiting a client’s office, you spill coffee on a desk, damaging a laptop and other electronic equipment. General liability insurance covers your legal liability to replace or repair the damaged items.
Example 2: A local competitor is suing you, stating that your new marketing campaign directly targets them and has cost them a significant amount of business. Your general liability policy will cover your legal costs, as well as any damages awarded in a court of law.
Example 3: While work is being done to your office, a client stops by and trips over some work equipment. He has named both you and the contractor in a lawsuit to cover medical bills and other damages. General liability insurance will pay the cost of your part of the lawsuit.
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, human resources consulting firms in America spend 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 human resources consulting firms should obtain:
Commercial Property Insurance
This policy, commonly included as part of a business owner’s policy (BOP), insures business-owned real estate and business property for claims such as fire and weather. You can tailor this policy to meet the specific needs of your business.
Professional Liability Insurance
In this industry, your clients rely on your professional experience and expertise to ensure their business runs smoothly. If they feel you have not met the terms of the service agreement, they could sue you for professional negligence. Even if the claim doesn't have merit, the court could still require you to pay claimant damages. Professional liability insurance pays related legal expenses and awarded damages, up to the limits of your policy.
In addition to the policies outlined above, there are a few other types of coverage your human resources consulting firm 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 mandates that business owners protect their employees, should they become ill or injured while on the job. Workers compensation covers the cost of related medical bills and a portion of wages lost while the employee is out of work. Additionally, it protects the employer against lawsuits, offering legal representation if an employee sues.
Workers compensation is typically purchased as a standalone policy.
Data Breach Insurance (aka Cyber Attack insurance)
Most modern companies rely on technology for most aspects of their business. Unfortunately, this also makes us vulnerable to online hackers, an attack excluded on a general liability policy. Data breach insurance fills that insurance gap, covering damages from a data breach that results in stolen user data.
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.