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 JUNK REMOVAL BUSINESS
Example 1: While on a removal job in a client’s home, one of your employees accidentally drops a box of heavy junk on the client’s foot. If held liable for the client’s injuries, your business would probably have some coverage under a general liability insurance policy for damages incurred or a settlement reached outside of court.
Example 2: An employee knocks over a water bottle during a junk removal session in a client’s home. The client slips on the spilled water and breaks her hip in several places. 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 client.
Example 3: One of your employees likes to make small talk with clients during jobs. He spreads stories about a competitor’s removal business, and the competitor gets wind of this. You are targeted with a lawsuit for slander. General liability insurance would likely cover legal costs related to the incident.
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, junk removal businesses in America spend between $450 - $1,000 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 junk removal businesses should obtain:
Commercial Auto Insurance
A motor vehicle used for commercial purposes must be covered by auto insurance. Junk removal businesses will undoubtedly require trucks or other vehicles for the physical junk removal process. Commercial auto insurance will provide your business coverage in the event of auto accidents.
Workers’ Compensation Insurance
In most states, you are legally required to cover part-time and full-time employees with a workers’ compensation policy. This allows coverage for any worker who is injured on the job, protecting your business from losses from employee lawsuits and helping to assure compensation for injured workers. Disability and death benefits are also provided through workers’ compensation policies.
In addition to the policies outlined above, there are a few other types of coverage your junk removal 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.
Commercial Property Insurance
If your junk removal business’ equipment, tools, resources, or commercial vehicles are damaged by disasters like fires or violent weather, a commercial property policy can provide coverage. This can save your business from drastic losses and steep costs of reinvestment.
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.