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 LIFE INSURANCE BROKERAGE
Example 1: While visiting a client’s home for an insurance review, you back your car into their garage, resulting in significant damage to the structure. General liability insurance should cover the damages and legal representation if the client brings a lawsuit against you.
Example 2: During the brokerage’s Christmas party, a client slips on a wet floor and requires emergency surgery. They are asking both you and the venue for reimbursement for medical bills. Your general liability policy should cover these expenses.
Example 3: A rival brokerage has named you in a lawsuit, claiming your new television ad implies they are unprofessional and has cost them business. General liability insurance would cover your legal fees and damages the court orders you to pay.
Example 4: To cover the cost of your new office building, you have applied for a loan. As part of the loan requirement, the bank is requiring a minimum of $1 million in liability coverage. A general liability policy would fulfill this requirement.
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, life insurance brokerages in America spend between $400 - $700 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 life insurance brokerages should obtain:
Professional Liability Insurance
Life insurance is a very personal, and your clients rely on your expertise to determine the coverage their family needs. If they feel you have failed them, either from errors and omissions or professional negligence, this policy would provide coverage for related lawsuits. The policy, also known as Errors and Omissions (E & O) insurance, covers expenses and awarded damages up to the limits of your policy.
Commercial Property Insurance
Protecting one’s business investment is a top priority when purchasing insurance. Commercial property insurance covers your assets, should a covered loss occur. If an owned building suffers damages, the policy pays the cost to repair or replace the building, as well as business-owned property kept onsite.
The property part of this policy excludes physical property if your business's rents space, but will cover the building’s contents. Renters should review their lease agreement to identify any parts of the building they are responsible for, as many policies will extend coverage with the proper added endorsements.
You can purchase commercial property insurance as part of a business owner’s policy (BOP).
In addition to the policies outlined above, there are a few other types of coverage your life insurance brokerage 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.
Data Breach Insurance
Managing a life insurance brokerage requires collecting and storing clients’ private and personal information. This makes you vulnerable to cyber attacks, a loss excluded on a general liability policy. Company owners should consider purchasing data breach insurance to ensure additional coverage. Also known as cyber attack insurance, this policy covers damages from a data breach that results in stolen user data.
Workers Compensation Insurance
The state mandates that all businesses carry workers compensation insurance on their employees. If an on-the-job accident occurs, the policy would cover their medical bills and a percentage of lost wages. Coverage extends to the business owners, should the incident result in a lawsuit.
Workers compensation insurance is often purchased as a standalone policy.
Commercial Umbrella Liability Insurance
Costs stemming from a lawsuit add up, often reaching the limits of underlying insurance policies. A commercial umbrella liability policy provides an additional layer of protection, taking over once you exhaust your general liability 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.