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.
Learn more about the risks covered by general liability insurance.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A LITERARY AGENCY
Example 1: To help gain new clients, you throw a huge holiday party. The icy conditions cause several people to slip and fall in the venue’s parking lot. They are each asking for medical bill reimbursement from you and the venue owner. Your general liability insurance should help cover those costs.
Example 2: As part of the lease agreement for your new office building, you have to show evidence of liability insurance for at least $2 million. Your general liability policy should help fulfill that obligation.
Example 3: During a recent interview, you are critical of another literary agency. Your general liability policy should cover your legal fees and court-awarded damages should they bring a slander case against you.
Example 4: Your new advertising pamphlets feature a photo that’s protected under copyright law and the owner brings a lawsuit against you. General liability insurance will ensure you get proper legal representation.
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
On average, literary agencies in America spend between $300-$600 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 literary agencies 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 literary agencies should obtain:
Professional Liability Insurance
Clients depend on your expertise and advice. If they feel harmed by your services, they may bring a suit against you for negligence or an error in professional services. Professional liability insurance would pay for legal representation and court-awarded damages, regardless of merit.
You can purchase this insurance, also known as Errors and Omissions insurance, as part of a business owner's policy (BOP).
Workers Compensation Insurance
The law requires workers compensation coverage for employees. If a team member has a work-related injury, this policy would cover their medical bills and a portion of their lost wages. If the injured employee decides to sue for additional damages, the insurance carrier would cover the cost of your legal fees.
You can purchase workers compensation insurance as a standalone policy.
Types of Coverage Some literary agencies May Need
In addition to the policies outlined above, there are a few other types of coverage your literary agency 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
To ensure protection of your professional investments, you should consider a commercial property insurance policy. Should a covered loss occur, this insurance provides coverage for a business’ building and/or its contents.
You can purchase commercial property insurance as part of a business owner’s policy (BOP).
Data Breach Insurance
As a literary agent, your firm stores sensitive information, not yet offered to the public. If a client suffers a loss due to a breach in your computer system, they could hold you liable. While a general liability policy excludes this kind of coverage, you can purchase it for an additional premium.
This type of insurance is also known as cyber attack insurance.
While you may have a staff that you know and trust, every business is a target for dishonest people. A standard business owner's policy, excludes employee dishonesty, fraud, and forgery coverage. Crime insurance ensures coverage should such losses like the above examples occur, reducing the chances of a gap in coverage.
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.