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 KIDS TAXI SERVICE
Example 1: Your driver takes longer than estimated to pick up his rider. While waiting, the child gets bullied at the meetup spot, resulting in physical injury. The child’s parents are suing your business, claiming the incident wouldn’t have happened had the driver been on time. General liability insurance should pay the kid’s medical bills and your legal fees, should the incident go to trial.
Example 2: A local competitor is suing, claiming your new ad campaign paints their business in a bad light, causing them to lose business. A general liability policy should cover your attorney’s fees and damages awarded by the court.
Example 3: You are looking to expand your business and have applied for a loan to purchase an additional vehicle. As part of the terms of the loan, the bank is requiring evidence of liability insurance. Your general liability insurance should meet these requirements.
Example 4: While visiting your office for an interview, a prospective new employee slips on the welcome mat and breaks his wrist. He is suing you for medical bills and lost wages while out of work, which your general liability policy should cover.
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, kids taxi services in America spend between $300 - $800 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 kids taxi services should obtain:
Commercial Auto Insurance
A personal auto policy excludes accidents involving business-related activities. To ensure there are no gaps in coverage, you should cover vehicles used in your kids taxi service with a commercial auto insurance policy.
If involved in an accident, this policy would cover the cost to repair your damaged vehicle, as well as medical expenses, liability claims, and lost equipment. While the state mandates the minimum amount of coverage you must carry, business owners should consider protecting their assets by purchasing more than the minimum requirement.
You can purchase commercial auto insurance as a standalone policy or as part of a business owner’s policy (BOP), depending upon the carrier.
Workers Compensation Insurance
The state requires businesses to carry workers compensation insurance for payrolled employees. This should cover employees who get injured while on the job. Workers compensation pays their medical bills and a percentage of wages lost while out of work due to the injury. If an employee names you in a lawsuit because of the incident, it covers your legal fees and court-awarded damages.
Workers compensation is generally purchased as a standalone policy.
Commercial Umbrella Liability Insurance
Being a business owner in this industry exposes you to many liability risks out of your control. Your general liability policy is the first line of defense in a liability claim. Once you exhaust the limits of that policy, the claimant can hold you financially responsible. A commercial umbrella policy adds a layer of protection, as this policy picks up where a general liability policy leaves off.
In addition to the policies outlined above, there are a few other types of coverage your kids taxi service 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.
Home-based Business Insurance
Many business owners in this industry run the business’ daily operations out of their home. But, a homeowner's policy excludes business property and losses, potentially leaving you without enough coverage. If loss occurs, home-based business insurance fills your coverage gaps.
You should check with your homeowners insurance company to determine if an extension of coverage for an additional premium is available. If not, you can purchase home-based business insurance as part of a business owners policy (BOP).
Data Breach Insurance
Like most modern companies, technology is an integral part of your business’ day-to-day operations. This leaves you vulnerable to online hackers and attacks excluded on a general liability policy. Data breach insurance insures your business for cyber attacks. Also known as Cyber Attack insurance, this policy helps cover 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.