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.

Example 1: Your employee is taking visitors on a tour of your hydroponic facilities when one of the visitors trips over a power cord and stumbles into a lighting installation. The cost of treating the visitor’s injuries will be covered by your general liability policy, and if he or she files a lawsuit, the policy will cover your legal costs.

Example 2: An employee is loading boxes of produce into the back of a customer’s truck with a forklift. She loses control of the forklift and drives it into the side of the customer’s truck. The cost of repairing the damage to the truck should be covered by your general liability policy.

Example 3: A competing hydroponic farm files a lawsuit against your company claiming libel and slander. Your general liability policy will cover the costs of hiring a legal defense. If you wind up paying a settlement to the competitor, your policy will cover the costs of that as well, up to your policy limits.

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 hydroponics farm in America spends between $400-$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:

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 Hydroponic Farms 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 hydroponic farms should obtain:

Workers’ Compensation Insurance

Running a hydroponic farm typically requires employees. If your company has hired one or more people, you are required by law to carry workers’ compensation insurance. Your insurance policy will help to pay for any medical care required by workers who are hurt while doing their jobs. The policy will also help to cover lost wages for an employee with a work-related injury.

Commercial Property Insurance

A commercial property insurance policy will help you cover the costs of replacing your hydroponic equipment in the event of a major accident. For instance, if a fire breaks out and destroys your equipment, your commercial property policy will pay for the replacement of that equipment up to your policy limits.

Types Of Coverage Some Hydroponic Farms May Need

In addition to the policies outlined above, there are a few other types of coverage your hydroponic farm 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 Auto Insurance

If you have any vehicles that you are using primarily for business, such as a delivery truck for your products, then you are required to carry commercial auto insurance. Your policy will pay for damage caused by employees driving your company vehicles.

Commercial Umbrella Insurance

A commercial umbrella insurance policy is designed to take over when your general liability insurance policy reaches its limit. For instance, you may find your company in a legal situation where your obligation turns out to go beyond your policy limits. When that happens, your commercial umbrella coverage will kick in and protect you from needing to pay the expenses beyond your coverage limits out of pocket.

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.