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 LUGGAGE STORAGE BUSINESS
Example 1: While waiting for a customer, your employee leaves several customers’ luggage unattended. Someone steals the bags, and their contents include several rare and expensive items. Your general liability insurance should cover the cost to replace these items and represent you in court, if necessary.
Example 2: A customer’s child ignores your posted signs and wanders into the storage area. A heavy bag topples over on top of the child, and he goes the hospital for emergency observation. General liability insurance should cover medical bills related to the accident.
Example 3: You make an off-color comment about one of your competitors. Word gets back to them and they name you in a lawsuit, where they are seeking damages for lost revenue. A general liability policy should cover your attorney’s fees and court-awarded damages.
Example 4: Your new landlord requires evidence of liability insurance. Your general liability policy should help fulfill this requirement.
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, luggage storage businesses in America spend between $350 - $700 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 luggage storage businesses should obtain:
Commercial Property Insurance
If you own your commercial space, it is imperative that you insure your property in the event of a loss. A commercial property insurance policy pays to repair or replace a business-owned building, as well as the business property kept onsite.
Renters should also inquire about commercial property insurance with coverage limited to business property kept onsite. For leases that require coverage for certain parts of the building, such as the air conditioning unit, many BOPs offer an optional coverage endorsement.
You can purchase commercial property insurance as part of a business owner’s policy (BOP).
Commercial Auto Insurance
If you have a vehicle for business purposes, state law requires at least the minimum commercial auto coverage. This policy pays to repair or replace damaged vehicles, liability claims, and lost equipment. Businesses with significant assets consider higher than the state-mandated limits.
You can purchase commercial auto insurance as a standalone policy or as part of a business owner’s policy (BOP).
Workers Compensation Insurance
In addition to commercial auto insurance, state law mandates that organizations must cover their employees on a workers compensation policy. If a worker gets injured while performing business activities, they could be eligible for coverage under this policy. Additional coverages include lost wages for the employee and legal representation for the business owner.
Carriers write workers compensation insurance as a standalone policy.
In addition to the policies outlined above, there are a few other types of coverage your luggage storage 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.
Inland Marine Insurance
If your business transports luggage between properties, inland marine insurance will cover the products while they're offsite. You should discuss all business activities with their insurance agent to ensure proper coverage. Your standard policy may exclude coverage for a customer’s property while under your care. For an additional premium, you should be able to purchase this coverage as an endorsement.
Standard policies exclude employee dishonesty, fraud, and forgery coverage. Crime insurance covers you for such a loss, reducing the chances of a gap in coverage.
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.