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.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A LIQUOR STORE
Example 1: In your liquor store, a customer is standing beneath an unstable shelving unit. The shelf begins to tilt downwards, and a large glass bottle of liquor slides off and hits the customer in the head, causing a serious concussion. The customer brings your business to court, claiming that he suffers intermittent dizziness and stomach discomfort on a daily basis since the injury. If liable for this outcome, general liability insurance would probably be able to cover any resulting court payments or settlements to the customer.
Example 2: An elderly customer is attempting to pull a six-pack of bottled beer from your refrigerator unit. She struggles to remove it from a lower shelf, throwing out her back and dropping the beer on her foot. She decides to bring your business to court and argues that the injury has interrupted her own small gardening business for the rest of the summer. If found liable, your liquor store business would probably be covered for a settlement or damage estimate by the court.
Example 3: You decide to attract more attention to your storefront by installing a large neon sign above your doors, visible from the street nearby. A driver who routinely passes by your store is distracted by the bright new sign. He veers into the oncoming lane, clipping another speeding car in a near head-on collision. Both vehicles are very badly scraped with smashed front corners where they contacted. If found liable for your distracting sign, general liability insurance would likely cover what you owe in a lawsuit targeting your business.
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
The average liquor store in America spends between $500 - $1,200 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 LIQUOR STORES 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 liquor stores should obtain:
Liquor Liability Insurance
A wise plan for operating a liquor business always includes this policy. Liquor stores accrue revenue primarily through the sale of intoxicating substances, and that means potential liability. Liquor liability policies cover claims of injury or property damage resulting from alcohol consumption. Almost any damaging action performed due to alcohol consumption can be covered, including car accidents caused by drunk drivers, physical assaults by intoxicated customers, and accidental self-injuries sustained while drinking alcohol purchased from your business.
Commercial Property Insurance
In the liquor business, success depends on product sales. With the vast majority of your profits coming directly from these sales rather than services performed, it is essential that all storefronts in your business receive inventory coverage. Due to flammable inventory, fires are particularly devastating to a liquor business. Commercial property insurance covers fires and similar disasters, like violent storms and water damage from exploded pipes.
TYPES OF COVERAGE SOME LIQUOR STORES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your liquor store 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.
Liquor stores typically run well with slim staffing and a low customer presence. The problem is that with few people around, a staff member can easily access store inventory illegally, as well as any on-site cash on the premises. Handling a store safe is probably best left to you as the business owner. However, if this is not always feasible, you may decide to grant access to a trusted, longtime employee. Unfortunately, the psychology behind the theft is often complex, and even a reliable employee may feel as though they are compelled to steal your cash if they are in a tough situation.
Between this and your valuable inventory, it is possible for an employee to make off with thousands of dollars of cash and inventory. Crime insurance can be a wise choice for business owners with reasonable concerns about leaving their assets in the hands of workers.
Workers’ Compensation Insurance
Most liquor stores are operated by a small group of employees whose shifts switch off once or twice over the course of business hours. If your business has employees, you’ll likely need the policy to cover claims from work-related accidents. Broken glass from bottles, stocking ladder accidents, and even robberies during store hours can create opportunities for worker compensation claims to arise. With this policy, both your employees and your business are protected from unfortunate financial losses resulting from on-site mishaps.
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.