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 LEATHER BUSINESS
Example 1: While visiting your operation, a store owner that wants to carry your leather line falls and injures her back. She is suing your company for the cost of her medical expenses and additional damages. General liability insurance would pay for legal representation and awarded damages.
Example 2: Another local leather artist is suing you, claiming you stole one of her designs. General liability insurance should cover the cost to represent you in court.
Example 3: While unloading merchandise for a local art fair, you accidentally knock over a neighboring artist’s display. They have brought a lawsuit against you for damages and lost revenue. Your general liability policy should cover their expenses and represent you in court.
Example 4: You must show evidence of liability insurance as part of the application to take part in a weekly art market. General liability insurance should fulfill that obligation.
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, leather businesses in America spend between $350 - $750 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 leather businesses should obtain:
Commercial Property Insurance
Businesses purchase a commercial property insurance policy to protect their investments. Should a loss occur, the policy would pay to repair or replace owned physical property, as well as any business-owned assets, kept onsite. A loss could include incidents such as windstorms, thefts, or fires.
You can purchase commercial property insurance as part of a business owner’s policy (BOP).
Inland Marine Insurance
When purchasing your business policy, be sure to discuss coverages and exclusions. If you travel off-site with your business tools, an inland marine policy may be necessary. Inland marine insurance insures business property, equipment, and tools when taken off premises. It fills a coverage gap where commercial property insurance may leave off.
In addition to the policies outlined above, there are a few other types of coverage your leather 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.
Product Liability Insurance
Entrepreneurs in the business of manufacturing, supplying, or selling products should consider including product liability insurance in their business owners package. If someone claims illness or injury from your product, they could name you in a lawsuit. The policy would ensure your coverage for legal fees as well as damages awarded by the court.
You should speak with an insurance professional about the intricacies of your business to tailor this policy to your business's unique needs.
Workers Compensation Insurance
This state-mandated policy provides coverage for employees who fall ill or get injured while on the job. Workers compensation insurance covers the employees’ medical bills and lost wages. It also covers the business owners’ legal fees should an employee bring a lawsuit against them for the incident.
You can purchase workers compensation insurance as a standalone policy.
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.