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.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A MEALS TO GO BUSINESS
Example 1: While delivering ingredients, a supplier trips over boxes left on the floor and is hurt in the fall. General liability insurance would probably cover their injuries.
Example 2: An employee trips while delivering a large order of finished pasta to a customer’s million-dollar home. The pasta spills out of the containers, and red sauce goes flying. The customer later sues because their expensive curtains, tablecloth, and carpet were all stained in the incident and are permanently ruined. General liability insurance would probably cover the damage.
Example 3: When conversing with a customer, an employee complains about the food at a local restaurant. The complaint is made in front of several people, and the restaurant owner eventually hears of the disparaging remarks. They file a slander lawsuit. General liability insurance would likely cover any legal costs and settlement.
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
The average Meals to Go Business in America spends between $500 - $1,200 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 MEALS TO GO BUSINESSES 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 Meals to Go Businesses should obtain:
Commercial Auto Insurance
All states require businesses that use vehicles on public roads to carry minimum levels of auto coverage. What type of commercial auto insurance your business needs depends on what vehicles the business delivers meals with. Company-owned cars and vans usually must be insured with a traditional commercial auto policy. If deliveries are made via employees’ personal vehicles, a hired and non-owned auto policy might suffice. The latter provides certain protections only when a personal vehicle is used for work (not including commutes).
Commercial auto insurance is often bundled with other coverages in a package policy.
Product Liability Insurance
Product liability insurance offers protection against lawsuits related to products that a business makes or sells. Customers might file a suit if a product causes damage or harm. Food sold to customers meets the insurance definition of a product, which is why this insurance might be appropriate for your meals to go business. A policy may help your business if improperly prepared foods spread E. coli, if an unpitted olive causes someone to choke, or in other situations.
Product liability insurance is available through many package policies.
TYPES OF COVERAGE SOME MEALS TO GO BUSINESSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your Meals to Go 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.
Home-Based Business Insurance
If you run a home-based meals to go business, you’ll likely want home-based business insurance. A policy will normally fill in some of the coverage gaps left by a homeowner’s insurance policy, which isn’t really intended to insure a business venture.
Home-based business insurance is available through a BOP, and some insurers offer it as an endorsement that can be added to their homeowner’s policies.
Commercial Property Insurance
If you operate from a company-owned kitchen, a property insurance policy will better meet your business’s insurance needs. This type of policy is commonly used to protect commercial properties and the equipment in them. Professional kitchen equipment is often expensive, so make sure you have enough property coverage to replace all of your stoves, ovens, refrigerators, freezers, fire sprinklers, and other equipment.
Property insurance is widely available through a BOP.
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.