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 HYDROPONICS STORE
Example 1: A customer walks into your storefront to investigate your inventory. It is raining outside, and there are select areas of the floor where water has pooled. The customer slips and falls, breaking his wrist. If liable, your business would probably be covered for some of the resulting damages or a settlement reached between you and the customer.
Example 2: While hauling a large box of heavy inventory, a customer refuses to be assisted as he approaches the cashier. He is wearing sandals and drops the box on his foot, breaking several toes. If you were found liable, general liability insurance would probably help cover some of the damages or any settlement reached between your business and the customer.
Example 3: In your storefront parking lot, a delivery truck carrying your store’s inventory backs into a customer’s car, shattering the back windshield and crunching the back of the vehicle. If liable, your business would probably be covered for some of the resulting damages.
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 store 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:
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 HYDROPONICS STORES 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 hydroponics stores should obtain:
Product Liability Insurance
This is a wise policy for any company that carries and sells products. A business’s inventory items can, unfortunately, be abused or mishandled in unpredictable ways. If any of your sold products happen to cause a customer serious injury, you could be found liable for damages. A product liability policy can be helpful in covering anything your business is found to owe to a customer who has been injured by your merchandise.
Commercial Property Insurance
This insurance is essential for any business that owns substantial quantities of material assets. This may include any owned commercial real estate, inventory, tools, equipment, vehicles, or other items. If fires or violent weather lead to significant destruction of your commercial property, your business can become caught up in a very serious financial deficit. The items destroyed are not only a complete loss, but they must be replaced in order for your business to continue operations. Commercial property insurance helps businesses to cover the costs of lost or damaged inventory and other material assets.
TYPES OF COVERAGE SOME HYDROPONICS STORES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your hydroponics store 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
As a matter of law in most states, you must cover part-time and full-time employees with a workers’ compensation policy. This will provide coverage for any worker who is injured on the job, preventing your business from losses through employee lawsuits and similar events. Disability and death benefits are also covered through a workers’ compensation 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.