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 LOCKSMITH
Example 1: A customer is in your showroom looking at new locks for their home when he trips over a cord and falls into a display unit. He breaks his wrist in the fall and hits his head as well. Your general liability insurance policy will likely cover his medical costs and your legal fees if there is a lawsuit.
Example 2: You rent out basic tools to help customers who want to install their own locks. As an employee is demonstrating how to use a drill, she accidentally slips and sends the drill bit into your customer’s hand, seriously injuring them. General liability coverage will likely pay for their medical bills if you file a claim.
Example 3: While transferring a heavy inventory item from your storage unit onto the sales floor, an employee loses control of his dolly. It hits a customer’s brand-new luxury vehicle and causes extensive damage to the passenger door. Your general liability insurance policy will likely pay for any necessary repairs.
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, locksmiths in America spend between $500 - $1,500 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 locksmiths should obtain:
Commercial Auto Insurance
Making house calls is a huge part of your business and requires that you spend a good deal of time on the road. While you may use a personal vehicle for some job duties, your personal car insurance policy will not provide protection if you’re involved in a work-related accident. Commercial auto insurance is the best way to make sure that your company cars and employees are covered in the event of an accident.
Workers’ Compensation Insurance
Workers’ compensation insurance is a required coverage in most states for businesses that have employees. If one of your employees is injured while on the job, this coverage will help to cover their medical bills. Additionally, if they can’t return to work right away, they may be able to receive disability benefits.
In addition to the policies outlined above, there are a few other types of coverage your locksmith 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
Maintaining a full inventory is important to your business. Additionally, your specialized equipment, tools, computer system, and office furniture make it possible to keep up with the demand of your customers. If any of these items are damaged in a fire or other accident, you will likely need to replace them as soon as possible. Commercial property insurance will cover the cost to repair or replace these essential business items.
Commercial Umbrella Insurance
If your primary insurance limits are exhausted by an accident claim or a lawsuit and you don’t have a backup plan, you could then be responsible for covering any remaining fees on your own. Commercial umbrella insurance is designed to step up in these situations to go beyond your primary policy limits and 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.
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.