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 LONGARM QUILITING BUSINESS
Example 1: Your client has left her sewing machine with you, as she is hoping you might be able to fix an issue. Your employee knocks it off the table, destroying it. General liability insurance should cover the cost to replace this expensive equipment.
Example 2: During a class you are teaching, a student injures herself, requiring medical assistance. A general liability policy should cover her medical bills.
Example 3: On a social media post, an employee implies your competitor is unprofessional. The company has named you in a lawsuit, claiming they have lost revenue from this slander. General liability insurance should cover your legal representation and court-awarded damages.
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, longarm quilting businesses 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.
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 longarm quilting businesses should obtain:
Commercial Property Insurance
Commercial property insurance, often written as part of a business owner’s policy (BOP), insures the business-owned property, including the repair and/or replacement of the building and business property kept onsite.
To ensure proper coverage, policyholders should review coverage limitations and potential added endorsements. Entrepreneurs working out of their home should inquire about the cost of home-based business insurance.
Workers Compensation Insurance
Once your company has grown enough to have team members, the state will require you to cover them on a worker’s compensation policy. If an employee injures themselves performing business activities, the policy would pay their medical expenses and a portion of their lost wages. It will also protect you should a lawsuit arise from the accident, providing legal defense and court-awarded damages and/or settlements.
You can purchase workers compensation insurance as a standalone policy.
In addition to the policies outlined above, there are a few other types of coverage your longarm quilting business 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.
Business Interruption Insurance
If your business has to shut down after a property claim, the financial impact could prove devastating. Business interruption insurance, also known as business income insurance, lessens that burden. It provides loss of income, fixed expenses, and extra expense coverage, setting the business up at a temporary location while building repairs are being completed.
This insurance is generally offered as part of a business owners’ policy (BOP) package.
Commercial Auto Insurance
If a business-owned vehicle is in an auto accident, commercial auto insurance can pay for the repairs to damaged vehicles, as well as medical expenses, liability claims, and lost equipment. While the state mandates this policy’s minimum limits, owners should consider purchasing higher than the required minimum.
You can purchase commercial auto insurance as a standalone policy or as part of a business owner’s policy (BOP).
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.