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 ILLUSTRATION BUSINESS
Example 1: You receive notice that one of your completed projects is a close match to another artist’s work, and they are suing you for copyright infringement. General liability insurance should cover the cost of your legal fees, as well as damages awarded to the claimant.
Example 2: At a meeting, you spill coffee on a client’s expensive equipment. They have asked your business to cover the cost to replace the item, along with the cost of lost business while their systems were down. Your general liability policy should cover those expenses and your legal representation costs.
Example 3: You have applied to take part in an art convention. They require evidence of liability insurance. General liability insurance should help fulfill this obligation.
Example 4: To expand your business, you have applied for a loan to purchase updated technology and software. The bank requires a $1 million liability policy as part of the terms of their loan. A general liability policy will cover these terms.
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, illustration businesses in America spend between $300 - $600 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.
Other Types of Coverage illustration businesses 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 illustration businesses should obtain:
Commercial Property Insurance
Commercial property insurance protects your investments. This will cover the cost to replace, rebuild, or repair owned business property damaged in a named loss. Because this policy has specific exclusions, business owners who are leasing should review the terms of their lease and work with an insurance professional to identify any other beneficial endorsements.
You can purchase commercial property insurance as part of a business owner’s policy (BOP).
Workers Compensation Insurance
Workers compensation insurance is a required coverage for every business’ employees. If a worker injures themselves conducting business-related activities, the policy would pay a portion of their wages while they are out of work. It will also cover medical bills stemming from the incident. For extensive injuries resulting in lawsuits, a workers compensation policy also ensures the business owner adequate defense in court.
Workers compensation is often purchased as a standalone policy.
Types of Coverage Some illustration businesses May Need
In addition to the policies outlined above, there are a few other types of coverage your illustration business 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 your business shuts down due to a covered loss, the financial impact could be devastating. Business interruption insurance provides loss of income and fixed expenses during that time. Some carriers also offer extra expense coverage, which would help you set up at a temporary location while you are getting the business back up and running.
Also known as business income insurance, this insurance can come as part of a business owners’ policy (BOP) package.
Data Breach Insurance
If you rely on technology for your business, you will want to consider purchasing data breach insurance. Also known as cyber attack insurance, this policy provides coverage for a liability loss due to a cyber attack, a coverage excluded on a 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.