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 LIVE BAND
Example 1: While setting up for a show, your sound person damages some of the venue’s equipment. General liability insurance should cover the cost to repair or replace the damaged property.
Example 2: During band practice, a friend trips over a cord and breaks his wrist. Your general liability policy should cover his medical bills.
Example 3: Your band is hoping to play at a local outdoor festival. The festival owners require evidence of liability insurance from each band. General liability insurance should help fulfill the festival’s terms.
Example 4: Your drummer uses the house drum set for a show. A fan jumps onstage, destroying the set as he crashes into it. The venue has named the band in a lawsuit, claiming you partial responsibility. General liability insurance should cover your legal fees and pay awarded damages, up to the limits of your policy.
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, live bands 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.
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Other Types of Coverage live bands 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 live bands should obtain:
Inland Marine Insurance
Bands often invest in equipment that travels with them to each show. If the equipment gets damaged while on the road, commercial property insurance will not cover your losses. An inland marine policy covers business-owned property while off-premises, either on a customer’s property or in transit.
Commercial Auto Insurance
If you use a business vehicle on public roadways, state law requires that a commercial auto policy be in place. This coverage pays the cost to repair or replace third-party property, the company’s damaged auto, and lost/damaged equipment. State-mandated minimums leave many entrepreneurs under-insured, so you should discuss policy coverage with an insurance professional.
Commercial auto insurance is generally purchased as a standalone policy.
Types of Coverage Some live bands May Need
In addition to the policies outlined above, there are a few other types of coverage your live band 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.
Workers Compensation Insurance
State law mandates coverage for employees under a worker's compensation policy. This coverage pays medical bills stemming from an on-the-job injury and/or illness and a percentage of the employee’s lost wages when they are unable to work. For injuries that result in lawsuits, it also ensures the business owner defense in court and pays awarded damages.
Workers compensation is often purchased as a standalone policy.
Standard business owner's policies exclude employee dishonesty, fraud, and forgery losses. Crime insurance provides coverage for such a loss 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.